The What Went Wrong? Feature for Chapter 8 Focuses on Wise

question 4

Multiple Choice

The What Went Wrong? feature for Chapter 8 focuses on Wise Acre Frozen Treats, a company that made organic popsicles from unrefined sweeteners. According to the feature, Wise Acre Frozen Treats failed largely because it ________.

• A) grew too quickly, which overwhelmed its cash flow
• B) was not careful enough in preparing its pro forma financial statements
• C) was not efficient in the way it utilized its assets
• D) spent too much money on marketing
• E) did not compare its financial ratios to industry peers

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Definitions:

Risk-free Rate

The theoretical rate of return on an investment with zero risk, often represented by the yield on government securities.

Lend

To provide money or resources to another party with the expectation of future repayment.

Borrow

The act of receiving something with the intent to return it, often referring to money in the context of loans where interest may be charged.