Identify the incorrect statement below; Group of answer choices “Too much inventory can lead to increased risk of pilferage and obsolescence”. “Non-current assets

Q: What does a high ratio in Creditors Turnover Ratio indicate? a. Company is delaying the payment to…

A: Creditors Turnover Ratio measures how fast a company is paying off its creditors.

Q: One of the indirect costs of financial distress is having to sell assets at lower than market value.…

A: Indirect costs of financial distress is not the directly present cost in the financial statements…

Q: Why is the quick ratio considered by some to be a better measure of liquidity than the current…

A: The quick ratio examines a company's short-term liquidity position and assesses its ability to meet…

Q: Which of the following statements is false?   A.   Funding risk is the risk that a firm will not…

A: The concept of risk is linked to the uncertainty of future occurrences that may or may not occur.…

Q: All else the same, which of the following management decisions would help alleviate the problem of a…

A: To alleviate the problem of excess cash, company’s management can take following steps- Investment…

Q: Which of the following statements is not correct   O a. Cash balance does not have an opportunity…

A: 1.A firm may hold surplus cash balance to pay dividend to its shareholders. It is correct…

Q: Information risk is a. The cost a company incurs to issue and service equity and debt. b. The risk…

A: The company's information is provided in the financial statement of the company which is useful for…

Q: Which of the following is not a limitation of the income statement? a. Comparability between…

A: Income statement is a financial statement that indicates company's income and expenditure. It shows…

Q: Which of the following statement is false?   a. None of above b. The capital structure should be…

A:

Q: Which of the following is false regarding book and market values? Select one: O a. Financial…

A: If the market does not trust that the firm is worth the value on its books, its market value might…

Q: Which of the following would increase risk?   a. Raise the level of working capital b. Increase the…

A: The working capital is the funds it needs to carry out day-to-day operations like cash, accounts…

Q: If a bank wants to avoid volatility in its regulatory capital, which investment classification would…

A: Answer: If banks want to volatility in regulatory capital, wanting banking organizations are likely…

Q: Liquidity dry up could cause a financial institutions to become balance sheet insolvent. Briefly…

A: Liquidity dry up occurs when financial institutions have a shortage of accounting, funding, and…

Q: nvolved

A: Large inventory holding causes a plethora of difficulties, such as: High carrying cost: The…

Q: Which of the following is an example of “cookie jar” accounting?  a) A company creates cash…

A: Cookie jar accounting is a term that have been defined as below.

Q: Which of the following statements about transaction costs and financial intermediation is not true?

A: intermediaries are important in financial transactions in security market they reduce costs of…

Q: Too much investment in current assets reduces firm profitability, whereas too little investment in…

A: Too much investment in current assets reduces firm profitability: The firm that invests more in…

Q: As a result of the COVID-19 crisis, company A has decided to sell its receivables to a bank in…

A: Solution:- Discussion of the effect of this financial decision on the company's current ratio, quick…

Q: In general, it's better to have a low inventory turnover ratio than a high one, as a low ratio…

A: The financial ratios refer to the ratios that are calculated using the financial data from the…

Q: Which of the following explains why relative valuation is preferred over intrinsic valuation?  a.…

A: Stock valuation: It is the process of analyzing the prices of stock before investing in it. The…

Q: The company’s usage of the Baumol model in cash management involves trade-off. A decrease in the…

A: William J. Baumol developed Baumol's EOQ model in 1952 based on the Economic Order Quantity (EOQ),…

Q: The book value is derived by subtracting the total liabilities of a company from its total assets.…

A: 1. Book Value is the difference between a company's total assets and its total liabilities.…

Q: Balance Sheet Insolvency occurs when Liabilities are greater than the Assets resulting in negative…

A: Insolvency Risk: Insolvency risk is a probability that an enterprise cannot satisfy its debt…

Q: What does a low ratio in Creditors Turnover Ratio indicate? a. Company collects the money fast from…

A: Ratio analysis means where different ratio of various years of years companies has been compared and…

Q: Tirole’s model of moral hazard associated with external financing (whether debt or equity) has…

A: A moral hazard develops when there is disproportionate knowledge between two parties and a shift in…

Q: Since risks, such as credit, liquidity, default, technological, and legal risks, among others, may…

A: 'Financial market stability' refers to a state in which market transactions are not disrupted…

Q: Inflation accounting is favored by modern financial analysts over the historical cost accounting as…

A: Following are the disadvantages of historical cost accounting in comparison with inflation…

Q: Refers to the inability of the business to meet its obligations as they mature on account of…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: Which of the following statements is NOT CORRECT? The corporate valuation model can be used both for…

A: Corporate valuation is a systematic process to find the true value based on financial data.  Most of…

Q: The deterioration of the balance sheet of financial institutions leads to : a. a deleveraging…

A: Effect of deterioration on the balance sheet of financial institutions: When a financial…

Q: If a company has very weak cash flows, an investor would prefer to be at the ____ of the waterfall…

A: Cash flows are the inflows and outflows of cash that are received and paid by an organization in a…

Q: Which of the following is not an example of a mitigating factor that reduces the risk that the going…

A: As per AS 2415: Consideration of an entity's ability to continue as a going concern, if auditor find…

Q: Which of the following statements is incorrect? O If the current ratio is too high the company may…

A:

Q: What are some tools that companies have to manage their (net operating) working capital?  Provide…

A: Net operating WC = CA - CL (current assets - current liabilities) The components of working capital…

Q: What is the stuitable strategy to do for, Operating cash does not cover debt, PE Ratio, EPS Ratio,…

A: Debt interest is a financial burden which needs to be paid even if the company does not have…

Q: Which of the following statements about transaction costs and financial intermediation is not true?…

A: Transaction costs are costs caused when the products or services are bought or sold. It reflects the…

Q: answer these question in just two sentences. a..“If a firm sold some inventory on credit, its…

A: The financial ratios refer to the ratios that are calculated using the financial data from the…

Q: The company’s usage of the Baumol model in cash management involves trade-off. A decrease in the…

A: Cash, according to William J. Baumol (1952), may be maintained in the same way as any other…

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.