Which of the Following Is Most Likely to Occur If

question 10

Multiple Choice

Which of the following is most likely to occur if a firm over-invests in net working capital?

• A) The current ratio will be lower than it should be.
• B) The quick ratio will be lower than it should be.
• C) The return on investment will be lower than it should be.
• D) The times interest earned ratio will be lower than it should be.

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Definitions:

Hypothetical-Deductive Reasoning

A method of problem solving or decision making that starts with a hypothetical situation and deduces logical outcomes.

Single-Factor

Pertaining to studies, experiments, or theories that are concerned with only one variable or aspect.

Multi-Factor

Pertains to situations, conditions, or phenomena influenced by multiple factors or variables, often used in contexts analyzing complex traits or outcomes.

Linear

Describes something arranged in or extending along a straight or nearly straight line.