TRUE OR FALSE When a customer pays its overdue bills, the current ratio is unchanged Equity...
TRUE OR FALSE
- When a customer pays its overdue bills, the current ratio is unchanged
- Equity investors are satisfied with the performance of a company when the cost of equity rE is lower than ROE.
- The higher the sales to capital ratio, the lower the reinvestments a company needs to make in order to sustain growth.
Homework Answers
When a customer pays its overdue bills, the current ratio is unchanged : FALSE
paying overdue bills reduces current liabilities as well as cash, Current ratio = Current Assets/Current Liabilities
the ratio will change
Equity investors are satisfied with the performance of a company when the cost of equity rE is lower than ROE. : FALSE
Equity investors will be satisfied when return on equity is higher than cost of equity
The higher the sales to capital ratio, the lower the reinvestments a company needs to make in order to sustain growth. : TRUE
If sales to capital ratio is high, it means small investment generate large sales and hence, lower investment is required for growth
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