Please Refer to the Following Data: Using the "Rule

question 36

Multiple Choice

Please refer to the following data: Using the "rule of thumb" guidelines, what conclusion could you draw?

• A)This business faces a liquidity problem, and may have trouble paying off its current liabilities with its current assets.
• B)This business has does not have enough total assets to meet its total obligations.
• C)This business has a very good current ratio, but the debt ratio indicates long-term liquidity problems.
• D)This business should have no difficulties paying off its liabilities.

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Definitions:

Sales Estimates

Forecasts of the quantity of a product or service a business expects to sell in a certain period, which is crucial for financial planning and inventory management.

Production Estimates

Projections or forecasts of the volume or quantity of goods that a company plans to manufacture in a given period.

Units

In the context of business, units refer to the individual items or quantities of a product or service that are produced or sold.

Production Budget

An estimation of the total costs to produce a set amount of goods over a specific period.