Which of the Following Statements Is FALSE

question 28

Multiple Choice

Which of the following statements is FALSE?

• A)The costs of selling assets below their value are greatest for firms with assets that lack competitive,liquid markets.
• B)Firms in financial distress tend to have difficulty collecting money that is owed to them.
• C)Suppliers may be unwilling to provide a firm with inventory if they fear they will not be paid.
• D)The loss of customers is likely to be large for producers of raw materials (such as sugar or aluminum),as the value of these goods,once delivered,depends on the seller's continued success.

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Definitions:

Variable Component

An element of cost or expense that varies directly with changes in production volume, business activity, or other drivers.

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted, indicating how much contributes to fixed costs and net profit.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating the amount each unit contributes to covering fixed costs and generating profit.

Degree of Operating Leverage

A financial ratio that measures the percentage change in operating income in response to a percentage change in sales.