Kim Has a Net Worth of -$20 000 and a Debt-To-Asset

question 5

Multiple Choice

Kim has a net worth of -$20 000 and a debt-to-asset ratio of three.Which of the following do you know is true?

• A)Kim has a major liquidity problem.
• B)Kim is on the verge of bankruptcy.
• C)Kim has assets of $10 000.
• D)Kim has liabilities of $20 000.

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Definitions:

Financing Activities

Transactions involving raising capital or repaying funds to owners and creditors, reflected in a firm's cash flow.

Investing Activities

The acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Non-Current Assets

Assets intended to be held for more than one financial period, such as property, plant, and equipment, intangible assets, or long-term investments.

Financial Structure

Refers to the mix of debt and equity finance used by a company to finance its operations and grow.