Streeter & Sons is a regional service company that has been in business for a few years, but has not employed a controller or anyone else full-time to keep track of its financial state. The company needs to take a good look at its financial state to determine whether it needs to make any changes in its practices, in order to prevent possible financial meltdown. Which of the following, if true, would strengthen the case that Streeter & Sons will be able to meet its current financial obligations?
A) The company has high levels of accounts payable.
B) The company's liabilities exceed its assets.
C) The company currently has a negative cash flow.
D) The company needs to expand its number of customers.
E) The company has more assets than it has liabilities.

Question

Quizplus · Accepted Answer

Having more assets than liabilities is an indication of financial stability and the ability to meet current financial obligations. Choice A would weaken the company's financial state as high levels of accounts payable indicate difficulty in paying off debts. Choice B and C both indicate a negative financial state, while choice D is not relevant to determining the company's ability to meet current financial obligations.

Streeter & Sons Is a Regional Service Company That Has