A Company Can Be a Risky Investment If

question 117

Multiple Choice

A company can be a risky investment if:

• A)cash flows have increased.
• B)receivables are being collected early.
• C)there is too much debt.
• D)inventories are selling too quickly.

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Definitions:

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership interest held by shareholders.

Subdivision

The act of dividing land into plots or parcels for the purpose of sale or development.

Debit Increases

Debit increases refer to the accounting principle where increases in assets, expenses, and losses are recorded on the debit side of a ledger.

Credit Decreases

In accounting, actions that decrease liabilities or increase assets, typically reflected in the credits column of a ledger.