Which of the Following Could Offset the Higher Risk Exposure

question 52

Multiple Choice

Which of the following could offset the higher risk exposure a company would face if its current ratio and net working capital were relatively low?

• A) Its current assets would need to be highly liquid.
• B) Its accounts receivable collection policy could increase the average collection period.
• C) It could offer no discounts for early payment by its customers.
• D) It could buy back some of its shares in the open market in order to reduce its equity.

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Definitions:

Addictive Drugs

Substances that lead to psychological or physical dependence due to their effects on the brain.

Withdrawal Symptoms

Symptoms, either physical or mental, that appear upon decreasing or ceasing the consumption of a substance on which the body relies.

Physical Dependence

A physiological state in which the body adapts to the presence of a substance, leading to withdrawal symptoms if use is reduced or stopped.

Addiction

A chronic condition characterized by compulsive engagement in rewarding stimuli despite adverse consequences.