Below Are Trends in Operation Cash Flows for Three Companies

question 95

Multiple Choice

Below are trends in operation cash flows for three companies.Based on an analysis of operating risk,which company's management is likely motivated to have the largest ratio of cash to noncash Company 1 Company 2 Company 3 assets? $$\begin{array} { | l | r | r | r | r | } \hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Total } \\\hline \text { Company 1 } & \$ 100,000 & \$ 150,000 & 50,000 & \$ 300,000 \\\hline \text { Company 2 } & 100,000 & 100,000 & 100,000 & 300,000 \\\hline \text { Company 3 } & 90,000 & 100,000 & 110,000 & 300,000 \\\hline\end{array}$$

• A)Company 1.
• B)Company 2.
• C)Company 3.

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Definitions:

Aggregate Demand Curve

A graph representing the total demand for goods and services within an economy at various price levels.

Government Spending

The total amount of public expenditure by government agencies and institutions.

Great Depression

A severe worldwide economic depression in the 1930s, marked by high unemployment, deflation, and significant declines in economic activity.

Aggregate Demand

The total demand for all goods and services in an economy at various price levels, at a given point in time.