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All Else Equal, If a Firm Buys Inventory Using Trade

Question 1

Multiple Choice

All else equal, if a firm buys inventory using trade credit, then its


A) financial debt-to-capital will increase, and its financial debt-to-assets will decrease.
B) financial debt-to-capital and financial debt-to-assets ratios will both increase.
C) financial debt-to-capital will decrease, and its financial debt-to-assets will increase.
D) financial debt-to-capital will be unchanged, and its financial debt-to-assets will decrease.

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