Aardvark Is a Small Pest-Control Business That Has 30 Employees

question 86

Multiple Choice

Aardvark is a small pest-control business that has 30 employees. The company started business within the past year and needs to make a decision on how best to make sure its finances are managed well as the company continues to grow its customer base and its business. Which of the following, if true, would not strengthen the case for Aardvark's closely monitoring its cash flow?

• A) The company needs to make sure it is not spending too much.
• B) The company needs to make sure it is generating enough revenue.
• C) The company needs to make sure its employees perform well.
• D) The company needs to make sure it can always pay its bills.
• E) The company needs to make sure it can make capital expenditures.

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Definitions:

Investment Turnover

A ratio that measures the efficiency of a company in generating sales from its investments in assets.

Assets

The resources owned by a business.

Residual Income

The amount of income that an individual or company has after all personal debts and expenses, including a mortgage, have been paid.

Operating Income

Earnings before interest and taxes (EBIT), reflecting a company's profit from its core business operations.