Which of the Following Increases the Chances of Business Failures

question 3

Multiple Choice

Which of the following increases the chances of business failures?

• A) increasing provision for doubtful accounts
• B) current ratio of 2:1
• C) liabilities that exceed market value of assets
• D) book value of assets that exceed liabilities

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Definitions:

Internal Rate

Often referred to in the context of Internal Rate of Return (IRR), it represents the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Capital Investment

Funds invested in a business or project with the expectation of generating income or profit, often involving the purchase of physical assets.

Present Value

The current worth of a future sum of money or stream of cash flows, discounted at a specific interest rate.

Present Value

The present value of a future amount of money or series of cash flows, taking into account a particular return rate.