Answer the following statements true (T) or false (F)
1. As the ratio of current assets to total assets increases, a firm's risk increases.
2. Too much investment in current assets reduces firm's profitability, whereas too little investment in current assets increases the risk of not being able to pay debts as they come due.
3. A firm is said to be insolvent when its total assets is less than its total liabilities and stockholders' equity.
4. An increase in current assets increases net working capital, thereby reducing the risk of insolvency.
5. Assuming that the level of total assets remains unchanged, the effect of a decrease in the ratio of current assets to total assets is an increase in a firm's risk of insolvency.
1. FALSE
2. TRUE
3. FALSE
4. TRUE
5. TRUE
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When using a just-in-time system, what qualities should be a supplier posses?
The following lots of a particular commodity were available for sale during the year Beginning inventory 10 units at $50 First purchase 25 units at $55 Second purchase 30 units at $60 Third purchase 15 units at $65 The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year according to the
first-in, first-out method? A) $1,250 B) $1,150 C) $1,275 D) $1,050
If the unit selling price is $40, the volume of sales is $3,000,000, sales at the break-even point amount to $2,500,000, and the maximum possible sales are $3,300,000, the margin of safety is 11,500 units
Indicate whether the statement is true or false
Generally, an accountant must exercise the degree of care that an ordinarily prudent accountant would exercise.
Answer the following statement true (T) or false (F)