Windham Corporation Has Current Assets of $400,000 and Current Liabilities

question 18

Multiple Choice

Windham Corporation has current assets of $400,000 and current liabilities of $500,000. Windham Corporation's current ratio would be increased by:

• A) the purchase of $100,000 of inventory on account.
• B) the payment of $100,000 of accounts payable.
• C) the collection of $100,000 of accounts receivable.
• D) refinancing a $100,000 long-term loan with short-term debt.

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Definitions:

Accounting Break-Even

The point at which total costs and total revenue are equal, resulting in neither profit nor loss.

Contingency Planning

The process of preparing for possible future situations or changes in operation, especially emergencies or unfavorable circumstances.

Simulation Analysis

involves using mathematical models to replicate a real-world system or process in order to predict outcomes or assess the impact of different variables on that system.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in its sales volume, highlighting the impact of fixed costs.