The Multiple-Of-Earnings Approach Consists of Multiplying One's Income by Some

question 92

True/False

The multiple-of-earnings approach consists of multiplying one's income by some factor to derive an estimate of the amount of life insurance needed.

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Definitions:

Short-Term Assets

Assets that will be converted into cash within one year.

Prepaid Expenses

Payments made for goods or services to be received in the future, recognized as assets on a balance sheet until they are incurred as expenses.

Inventory

The quantity of goods and materials a business holds for the purpose of resale or production.

Short-Term Assets

Assets expected to be converted into cash, sold, or consumed within one year or within the operating cycle of a business, whichever is longer.