Company X Has a Capital Acquisitions Ratio of 1

question 6

Multiple Choice

Company X has a capital acquisitions ratio of 1.42 while Company Y has a capital acquisitions ratio of 7.28.Which of the following could be true?

• A)If Company X and Y are in different industries,these ratios may reflect the different production needs of the industry.The ratio cannot really be compared across industries.
• B)Company Y may be more efficient at managing cash flows.
• C)Company Y may be lagging in adopting new technology which could hurt future sales.
• D)All of the above.

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Definitions:

NCI

Non-controlling interest, a portion of the equity in a subsidiary not attributable directly or indirectly to the parent company.

Profit

The financial gain realized when the revenues generated from business activities exceed the expenses, taxes, and costs associated with maintaining the business.

Inter-Entity Transactions

Transactions that occur between two entities within the same parent company or corporate group, affecting the accounting practices and consolidation processes of the group.

NCI

An acronym for Non-Controlling Interest, representing minority ownership in an enterprise, where the owner does not have significant control over the company’s operations.