Why Should You Have One or Two Members of Your

question 3

Multiple Choice

Why should you have one or two members of your Board of Directors who can be considered independent?

• A) So they can act in the interest of the principal owner
• B) They are not susceptible to potential conflicts of interest
• C) They usually make the final decisions
• D) They have a long list of business and professional contacts
• E) They will answer the majority of the entrepreneur's questions

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Definitions:

Accounts Receivable

Money owed to a company by its customers for products or services that have been delivered or used but not yet paid for.

Liquidity of Receivables

Indicates how quickly receivables can be turned into cash, reflecting a company's efficiency in managing credit it extends to customers.

Cash Sales

Transactions in which payment is made in full at the time of the sale, typically in cash.

Petty Cash Fund

A small amount of cash on hand used for covering minor expenses, managed through a system of vouchers and replenishments.