Need help with a question~ (1 Viewer)

[dacaca]

Question: The introduction of the GST is more likely to influence a business's

a) Liquidity
b) Gearing
c) Stability
d) Profitability

I think its Stability. Need advices^^

 

[dontworry]

I was thinking it would of been profitability? as it raises the amount they recieve from their customers? but then again i could be wrong?

 

[Eddykungfu]

From Process of Elimination
A) It is Not Liquidity, since it does not effect Current Assets /Non-Current Assets.

B) Gearing is your Debt To Equity. Goods + Services Tax will not effect your debt to Equity, since you aren't funding anything.

C) Stability - >.> Not even in the syllabus.

D) Profitability - GST means an Increase of Expenses. and Since a Businesses Net profit is (Gross Income - Operating Expenses). If Expenses increase, then Net profit will decrease.