Warning Signs of Problems in Managing Cash Flows Are

question 52

Multiple Choice

Warning signs of problems in managing cash flows are:

• A) proceeds of borrowing that are continually greater than repayments of borrowings.
• B) dividends paid to shareholders that are greater than profit.
• C) cash flow from operating activities that is significantly lower than profit.
• D) all of the above.

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Definitions:

Suretyship Provision

A legal agreement in which a third party agrees to be responsible for the debt or obligation of another party if that party fails to perform or pay.

Main Purpose Doctrine

A legal principle that a promise to pay the debt of another does not need to be in writing if the guarantor's main purpose benefits themselves.

Statute of Frauds

A legal principle requiring certain contracts to be in writing and signed by the party to be charged to be enforceable.

Oral Contract

An agreement between parties that is spoken, not written, but is still legally binding.