The Relationship Between Current Assets and Current Liabilities Is Important

question 78

Multiple Choice

The relationship between current assets and current liabilities is important in evaluating a company's

• A)profitability.
• B)liquidity.
• C)market value.
• D)solvency.

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Definitions:

NPV

Net Present Value is a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time for an investment.

Real Option Valuation

A technique in finance that calculates the value of future investment decisions, including the choices and flexibility in business projects.

Real Options

The value of additional decision-making opportunities available to a business when investing, likened to financial options.

Cash Flow

The amount of cash and cash equivalents being transferred into and out of a business, indicating its liquidity position.