Which of the Following Statements Is FALSE

question 126

Multiple Choice

Which of the following statements is FALSE?

• A) The calculation of the accounts receivable average collection period (ACP) would generally produce a more realistic assessment of how a firm is managing its accounts receivable if the analyst were to calculate the ACP for each month and average the results, than if the analyst were to solely use the fiscal year-end accounts receivable value.
• B) If an analyst were to compare the inventory turnover of one firm to that of another, the comparison can be distorted if the two firms use different methods of valuing ending inventory.
• C) Assume that two firms are in the same industry and one reports a higher debt ratio than the other. We can safely say that the firm that has the highest debt ratio is the riskier of the two firms.
• D) A firm that has a current ratio that is significantly above the industry norm will, as a direct consequence, also have a significantly better return on assets than if its current ratio was below the industry norm.

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Definitions:

Stock Price

The price at which a particular stock is currently trading on the market.

Confidence Index

An indicator designed to measure confidence or sentiment among investors or consumers, often through surveys or economic indicators.

Bullish

It describes an investor's belief or market sentiment where the expectation is that a specific stock, asset, or market will experience an increase in value.

Bearish

A term used to describe the expectation that a particular security, market, or economy will experience a decline in value.