Which of the Following Is Correct Regarding Transactions and Their

question 178

Multiple Choice

Which of the following is correct regarding transactions and their effect on ratios?

• A) Lending agreements often require a company's current ratio to stay above 2.5.
• B) Lending agreements often state that a company's debt ratio may not go below a certain threshold.
• C) If a company fails to meet one of the loan conditions, it is said to default on its lending agreement.
• D) Companies are generally not concerned about how certain transactions will affect their key ratios.

---

Definitions:

Conifers

Trees and shrubs that bear cones and typically have needle-shaped or scale-like leaves, such as pines and cedars.

Boreal Forest

Extensive high-latitude forest of the Northern Hemisphere; conifers are the predominant vegetation.

Temperatures

A measure of the warmth or coldness of an object or substance with reference to some standard value.

Freshwater Lakes

Bodies of standing water, of various sizes, that contain low concentrations of salt, making them habitable for a variety of freshwater organisms.