The Most Common Error People Make Is to Underestimate Cash

question 72

True/False

The most common error people make is to underestimate cash inflows and overestimate cash outflows.

---

Definitions:

Variable Costs

Expenses that fluctuate based on the amount of output or the level of activity in a business.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, highlighting the fixed versus variable costs of a business.

Variable Costs

Costs that change in proportion to the level of goods or services that a business produces.

Straight-Line Depreciation

A technique for distributing the expense of a physical asset evenly over its lifespan on an annual basis.