Suppose a Company Unexpectedly Receives a Huge Order for Its

Multiple Choice

Suppose a company unexpectedly receives a huge order for its main product. To cope with this, the owner borrows money to rent an additional facility to fill the orders and to pay the temporary workers who will produce the large order. The owner does this hoping that the additional costs will be more than covered by the revenue from selling the additional units of the product. Which ratio will be most affected by these decisions?

A) The short-term solvency ratio
B) The long-term solvency ratio
C) The profitability ratio
D) The activity ratio
E) The equity ratio