Which of the following statements is correct? a. An increase in a firm’s inventories will call for additional financing unless the increase is offset by an equal or larger decrease in some other asset account. b. A high quick ratio is always a good indication of a well-managed liquidity position. c. A relatively low return on assets (ROA) is always an indicator of managerial incompetence. d. A high degree of operating leverage lowers the risk by stabilizing the firm’s earnings stream
Which of the following statements is correct? a. An increase in a firm’s inventories will call for additional financing unless the increase is offset by an equal or larger decrease in some other asset account. b. A high quick ratio is always a good indication of a well-managed liquidity position. c. A relatively low return on assets (ROA) is always an indicator of managerial incompetence. d. A high degree of operating leverage lowers the risk by stabilizing the firm’s earnings stream
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Which of the following statements is correct?
a. An increase in a firm’s inventories will call for additional financing unless the
increase is offset by an equal or larger decrease in some other asset account.
b. A high quick ratio is always a good indication of a well-managed liquidity
position.
c. A relatively low
incompetence.
d. A high degree of operating leverage lowers the risk by stabilizing the firm’s
earnings stream
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