In Regards to Cash Flow, a Firm Should Ideally Have

question 224

Multiple Choice

In regards to cash flow, a firm should ideally have

• A) enough money coming into the firm to cover the expenses in that period.
• B) more cash flowing out than in since this represents growth.
• C) to use short-term financing only two to three times a year.
• D) a constant need for short-term financing.
• E) most of its cash going to its customers.

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Definitions:

Bankruptcy

A legal process through which individuals or businesses unable to meet their financial obligations can seek relief from some or all of their debts.

Solvent

The state of having assets in excess of liabilities, enabling a company or individual to meet its financial obligations.

Nonprofit Corporations

Organizations that operate for charitable, educational, cultural, or public service purposes rather than for profit, often enjoying tax-exempt status.

Private Foundations

Non-profit organizations usually created via a single primary donation from an individual or business and whose funds and program operations are managed by its own trustees or directors.