If All Else Is Held Equal,an Increase in the Current

question 27

Multiple Choice

If all else is held equal,an increase in the current ratio of a company is generally considered to be:

• A) an indication that current assets have decreased
• B) an indication that current liabilities have increased
• C) an indication that the company will have increased difficulty meeting short-term obligations
• D) an indication that the company will be better able to meet short-term debt obligations

---

Definitions:

Absorption Costs

The total of all direct and indirect manufacturing costs assigned to a product.

Suboptimal Decisions

Decisions that do not yield the best possible outcome or that are less efficient compared to the optimal choice.

Buying Division

A segment within a company responsible for purchasing goods, materials, and services from external suppliers.

Transfer Prices

Prices used for the sale of goods or services between departments or subsidiaries within the same company, often set to comply with tax laws.