Table 142 the Company Earns 5 Percent on Current Assets

question 92

Multiple Choice

Table 14.2 The company earns 5 percent on current assets and 15 percent on fixed assets.The firm's current liabilities cost 7 percent to maintain and the average annual cost of long-term funds is 20 percent.
-If the firm was to shift $7,000 of fixed assets to current assets,the firm's net working capital would ________,and the risk of not being able to meet current obligations would ________,respectively.(See Table 14.2)

• A)increase; increase
• B)decrease; decrease
• C)increase; decrease
• D)decrease; increase

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Definitions:

ACTH

ACTH stands for Adrenocorticotropic Hormone, a hormone produced by the pituitary gland that stimulates the adrenal glands to release cortisol, a key stress hormone.

Adrenal Cortex

The outer part of the adrenal gland that produces steroid hormones controlling water and mineral balance, metabolism, and sexual function.

Self-blame

The act of holding oneself responsible for an event or situation that is not entirely under one's control, often leading to feelings of guilt or inadequacy.

Autonomic Arousal

The activation of the autonomic nervous system, leading to physiological reactions like increased heart rate or sweating.