In the Context of Cash Flow Analysis, Why Is a Period

question 8

Multiple Choice

In the context of cash flow analysis, why is a period of rapid growth considered to be one of the most dangerous times for an entrepreneurial business?

• A)Because it can result in the business ordering and paying for additional orders while there is no cash coming into the firm
• B)Because it is difficult to accurately forecast the cash flow of the firm in this situation
• C)Because a rapid slump in sales almost always comes after a rapid and unexpected growth
• D)Because the employees of small firms are rarely equipped to cope with a rise in their workload