One of the Drawbacks of Harvesting by Withdrawing Cash Flows

question 25

True/False

One of the drawbacks of harvesting by withdrawing cash flows slowly is that the owner must seek out a buyer for the eventual sale of the business.

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Definitions:

Cash Dividends

A distribution of a portion of a company's earnings, decided by the board of directors, paid to a class of its shareholders.

Financing Activities

Activities that result in changes in the size and composition of the equity and borrowings of a company, reported in the cash flow statement.

Net Income

The net profit of a company following the deduction of all expenses and tax amounts from its total income.

Bonds Payable

Long-term debt securities issued by corporations or governments to raise capital, with an obligation to pay back the principal along with interest.