A Reduction in the Ratio Net Sales/average Property, Plant and Equipment

question 6

Multiple Choice

A reduction in the ratio net sales/average property, plant and equipment over time could mean:

• A) there is an elevated level of inflation.
• B) the price of plant and equipment is falling.
• C) the firm may be heading for a liquidity crisis.
• D) there is an over-investment in plant and equipment.

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Definitions:

Uniform Distribution

A type of probability distribution in which all outcomes are equally likely.

Probability Density Function

An equation that indicates the probability of a random variable occurring at a certain value.

Interval

In mathematics, this refers to a range of numbers between two defined points, which can be either open or closed at each end.

Exponential Distribution

A probability distribution used to model the time between events in a Poisson process, describing the times between events in a continuous but rare occurrence.