A Negative Value for the Net Liquid Balance Indicates Reduced

question 18

Multiple Choice

A negative value for the net liquid balance indicates reduced financial flexibility and

• A)an increased dependence on outside financing
• B)an increased sustainable growth rate
• C)that cash and equivalents are growing relative to the company's use of short-term financing
• D)that bank borrowing is growing relative to other arranged short-term financing

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Definitions:

Straight-Line Depreciation

A technique for distributing the cost of an asset uniformly over its lifespan.

Capital Cost Allowance

Capital Cost Allowance is a tax deduction in some jurisdictions that represents depreciation for tax purposes, allowing businesses to deduct the cost of certain assets over a period.

Deferred Tax

A tax obligation or asset that results from temporary differences due to the different timing of recognition of income and expenses for tax and accounting purposes.

Tax Rate

The fraction of earnings that the government requires from an individual or business as tax.