Why Do Many People Inflate Their Estimates

question 44

Essay

Why do many people inflate their estimates?

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Definitions:

Interest

The cost of borrowing money or the return on investment for savings and investments, typically expressed as an annual percentage rate.

Liquidity Ratios

Financial metrics used to assess a company's ability to meet its short-term debt obligations, by comparing current assets to current liabilities.

Debt-Paying Ability

A financial metric used to gauge a firm's capacity to settle its obligations, often assessed through ratios such as the debt to equity or debt service coverage ratios.

Operating Cycle

The duration it takes for a company to buy inventory, sell that inventory, and collect cash from the sale, representing the time it takes to convert resources into cash flows.