Which of the Following Statements Is Correct

question 33

Multiple Choice

Which of the following statements is correct?

• A) In the text,depreciation is regarded as a use of cash because it reduces fixed assets,which then must be replaced.
• B) If a company uses some of its cash to pay off short-term debt,then its current ratio will always decline,given the way the ratio is calculated,other things held constant.
• C) During a recession,it is reasonable to think that most companies' inventory turnover ratios will change while their fixed asset turnover ratios will remain fairly constant.
• D) During a recession,we can be confident that most companies' DSOs (or ACPs)will decline because their sales will probably decline.
• E) Each of the above statements is false.