Which of the Following Statements Is CORRECT

question 37

Multiple Choice

Which of the following statements is CORRECT?

• A) suppose a firm is operating its fixed assets at below 100% of capacity, but it has no excess current assets. based on the afn equation, its afn will be larger than if it had been operating with excess capacity in both fixed and current assets.
• B) if a firm retains all of its earnings, then it cannot require any additional funds to support sales growth.
• C) additional funds needed (afn) are typically raised using a combination of notes payable, long-term debt, and common stock. such funds are non-spontaneous in the sense that they require explicit financing decisions to obtain them.
• D) if a firm has a positive free cash flow, then it must have either a zero or a negative afn.
• E) since accounts payable and accrued liabilities must eventually be paid off, as these accounts increase, afn as calculated by the afn equation must also increase.

Calculate and interpret various financial ratios, including total asset turnover, inventory turnover, and accounts receivable turnover.

Understand the impact of transactions on liquidity and efficiency ratios, including the acid-test ratio and the average sale/ collection period.

Grasp the calculation and significance of the gross margin percentage, dividend payout ratio, and times interest earned ratio.

Comprehend the effects of changes in a company's financing structure on profitability and leverage ratios, such as return on assets, debt-to-equity ratio, and book value per share.

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Definitions:

Reduces Stress

The effect of lowering psychological or physiological strain or tension typically through various strategies or interventions.

Negative Reinforcer

A stimulus whose removal following a behavior increases the likelihood of that behavior being repeated.

Discriminative Stimulus

A stimulus in the context of operant conditioning that signals the availability of reinforcement or punishment, guiding behavior towards or away from certain responses.

Operant Response

A behavior that is modified by its consequences, including rewards or punishments, as described in operant conditioning theory.