An Improvement in the Proportion of a Company's Assets That

question 54

Multiple Choice

An improvement in the proportion of a company's assets that are financed with debt would be shown by:

• A) an increase in the debt ratio
• B) a decrease in the debt ratio
• C) an increase in the current ratio
• D) a decrease in the current ratio

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Definitions:

Common-size Percent

A financial analysis tool that expresses each line item on a financial statement as a percentage of a base amount, facilitating comparison across different periods or companies.

Total Assets

The sum of all assets owned by a company, including both current and non-current assets.

Net Income

The amount of earnings left after all business expenses, including taxes, operating costs, and interest, have been subtracted from total revenue.

Trend Analysis

Trend analysis is a technique used in financial analysis and business strategy to identify patterns and predict future movements in data over time, often utilized for revenue, expenses, and stock prices.