Which of the following statements is correct? In the text, depreciation is regar

Question

Which of the following statements is correct?

In the text, depreciation is regarded as a use of cash because it reduces fixed assets, which then must be replaced.
If a company uses some of its cash to pay off short-term debt, then its current ratio will always decline, given the way ratio is calculated, other things held constant.
During a recession, it is reasonable to think that most companies inventory turnover ratios will change while their fixed asset turnover ratio will remain fairly constant.
During a recession, we can be confident that most companies' DSOs (or ACPs) will decline because their sales will probably decline.
Each of the above statements is false.

Explanation / Answer

During a recession, it is reasonable to think that most companies inventory turnover ratios will change while their fixed asset turnover ratio will remain fairly constant.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.