The Following Contains Information from the Records of the Balfor

question 124

Multiple Choice

The following contains information from the records of the Balfor Architecture Firm.

Which of the following statements is an accurate interpretation of the current ratio of Balfor Architecture Firm? (Round your answer to two decimals. )

• A)The company has $2.19 of current assets for every $1.00 of liabilities.
• B)The company has $1.90 of current assets for every $1.00 of current liabilities.
• C)The company has $1.51 of current assets for every $1.00 of liabilities.
• D)The company has $0.61 of current assets for every $1.00 of current liabilities.

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Definitions:

Required Return

The smallest annual percent yield necessary to convince people or corporations to allocate funds towards a certain security or project.

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted, used to determine the rate of return a company must earn on its existing assets to satisfy its creditors, owners, and other providers of capital.

Low Risk Projects

Investments or projects that are considered to have a lower probability of resulting in a financial loss.

Investor Risk Aversion

The tendency of investors to prefer lower-risk investments to avoid potential losses.