Small Businesses Rely Heavily on Long-Term Financing

question 16

True/False

Small businesses rely heavily on long-term financing.

---

Definitions:

Book Value

The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

Profitability Index

A financial metric that measures the profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Net Present Value

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time, used to evaluate the profitability of an investment.

Payback

The period of time required for the return on an investment to "repay" the original investment cost.