Why Might Falling Interest Rates Indicate an Unfavorable Environment for a Business

question 22

Essay

Why might falling interest rates indicate an unfavorable environment for a business to invest in capital?

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Definitions:

Owner's Equity Statement

A financial statement showing the changes in the equity of a business entity over a period of time.

Revenues

The income generated from normal business operations and includes discounts and deductions for returned merchandise.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenues.

Monetary Unit Assumption

An accounting principle that assumes transactions and events can be expressed in monetary units.