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Choose one out of the 6 questions below. Explain your response in a paragraph or two. This isn't automatically graded ( except being marked correct
Choose one out of the questions below. Explain your response in a paragraph or two. This isn't
automatically graded except being marked correct and so you need to make sure what you write
makes sense.
What are the major sources of financial information for publicly owned corporations?
The higher the accounts receivable turnover rate, the better off the company is Do you agree?
Why?
Can you think of a situation where the current ratio is very misleading as an indicator of short
term, debtpaying ability? Does the acidtest ratio offer a remedy to the situation you have
described? Describe a situation where the acidtest ratio does not suffice either.
Through the use of turnover rates, explain why a firm might seek to increase the volume of its
sales even though such an increase can be secured only at reduced prices.
Indicate which of the relationships illustrated in the chapter would be best to judge:
The shortterm debtpaying ability of the firm. The overall efficiency of the firm without regard to the
sources of assets. The return to owners stockholders of a corporation. The safety of longterm
creditors' interest. The safety of preferred stockholders' dividends.
Cite some of the possible deficiencies in accounting information, especially regarding its use in
analyzing a particular company over a year period.
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