A Cumulative Cash Deficit Indicates a Company

question 8

Multiple Choice

A cumulative cash deficit indicates a company:

• A) has at least a short-term need for external funding.
• B) is facing long-term financial distress.
• C) will go out of business within the year.
• D) is capable of funding all of its needs internally.
• E) is using its cash wisely.

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Definitions:

Short Run

A period in economics during which some factors of production or inputs are fixed, influencing decisions on production and costs.

Fixed Costs

Costs that do not vary with the level of production or sales and must be paid regardless of the quantity produced or sold.

Farm

An area of land and its buildings, used for growing crops and raising animals.

Production Level

Refers to the amount of goods or services produced by a company or industry over a specific time period.