A Joint Venture Can Add Significant Potential Liabilities to the Parent

question 45

True/False

A joint venture can add significant potential liabilities to the parent company that are not on the face of the balance sheet.

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Definitions:

Capacity Utilization

The percentage of a business or industry's total possible production capacity that is actually being utilized.

Financial Planning Process

The financial planning process involves setting financial goals, analyzing current financial conditions, developing strategies to achieve those goals, and implementing and monitoring the strategy.

Planning Horizon

The long-range time period the financial planning process focuses on, usually the next two to five years.

Dividend Policy

A company's strategy or policy to decide how much profit it will pay out to shareholders as dividends.