Company a Has Current Assets of $42 Billion and Current

question 102

Multiple Choice

Company A has current assets of $42 billion and current liabilities of $31 billion. Company B has current assets of $2.7 billion and current liabilities of $1.8 billion. Which of the following statements is correct, based on this information?

• A)Company A has less leverage than Company B.
• B)Company A has greater leverage than Company B.
• C)Company A and Company B have roughly equivalent enterprise values.
• D)Company A is less likely than Company B to have sufficient working capital to meet its short-term needs.

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Definitions:

Straight Rebuy

A routine purchasing decision in which a business reorders a product or service without any modifications or consideration of new options.

Contract Negotiations

The process of discussing terms and reaching an agreement in a contract, often involving matters such as price, delivery, and terms of service between two or more parties.

Low-involvement

Products or services that require minimal thought and effort from consumers before purchase due to their simplicity and low cost.

High-involvement

Refers to purchase decisions that carry a higher risk to buyers and therefore require more thought and research.