The text discusses various factors that relate to the risk of a company facing financial distress or bankruptcy. Which of the following might be in indicator of higher risk, based on the discussion in the text?
A) The company has a low rate of asset turnover.
B) The company's assets are mostly liquid assets.
C) Most of the company's debts are long-term, not short-term.
D) The company's sales levels do not vary much from year to year.

Question

Quizplus · Accepted Answer

A low rate of asset turnover indicates that the company is not efficiently utilizing its assets to generate revenue, which increases the risk of financial distress or bankruptcy.

The Text Discusses Various Factors That Relate to the Risk