Dallas Corp

question 7

Multiple Choice

Dallas Corp. has a current ratio of 6, under which of the following scenarios might this indicate a problem

• A) inventories are increasing due to the introduction of a new product
• B) the company is holding cash in expectation of making a large investment in equipment
• C) receivables are increasing due to increasing sales
• D) inventories are increasing and the industry in which Dallas Corp. operates is experiencing a recession

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Definitions:

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the company's assets and earnings.

Cash Dividends

Cash dividends are payments made by a corporation to its shareholders, usually as a distribution of profits.

Financing Activities

Transactions involving the inflow or outflow of funds related to a company's financing, such as issuing debt or equity.

Common Stock

A type of equity security that represents ownership in a corporation, providing voting rights and potentially a share in the company's profits through dividends.