Which of the following increases the chances of business failures?
A) increasing provision for doubtful accounts
B) current ratio of 2:1
C) liabilities that exceed market value of assets
D) book value of assets that exceed liabilities

Question

Quizplus · Accepted Answer

When liabilities exceed the market value of assets, it indicates that the business may not be able to pay off its debts and obligations in the long run, which increases the risk of business failure. A high provision for doubtful accounts and a current ratio of 2:1 suggest that the business is managing its finances well, while a book value of assets that exceeds liabilities indicates that the business has a strong financial position.

Which of the Following Increases the Chances of Business Failures