Which of the following statements is incorrect?
A) For most businesses, increases in spontaneous liabilities will be enough to fund the necessary increases in assets.
B) The capital intensity ratio indicates the amount of assets the firm needs to invest to generate each dollar in sales.
C) The vast majority of fixed assets are "chunky" or "lumpy" since they have to be bought in non-divisible quantities.
D) All of these choices are correct.

Question

Quizplus · Accepted Answer

Statement A is incorrect because for most businesses, increases in spontaneous liabilities are not typically enough to fund the necessary increases in assets. Businesses often need to seek external financing to cover the gap between what can be funded through spontaneous liabilities and the total investment needed in assets.

Which of the Following Statements Is Incorrect