Which of the following is a false statement as it relates to analysis?
A)Profitability may not be a major consideration as long as the resources for repayment can be projected.
B)Equity capital provides creditors with a cushion against loss.
C)There is a difference between the objectives that are sought by short-term grantors of credit and those sought by long-term grantors of credit.
D)If merchandise with a 20% markup is sold on credit,it would take ten successful sales of the same amount to make up for one sale not collected.
E)The financial structure of the entity is of interest to creditors.

Question

Quizplus · Accepted Answer

D) is false because if merchandise is sold with a 20% markup, it would only take five successful sales of the same amount to make up for one sale not collected, not ten. The calculation is based on the profit margin, not the number of sales.

Which of the Following Is a False Statement as It