Which of the Following Statements Regarding Liquidity and Profitability Is

question 123

Multiple Choice

Which of the following statements regarding liquidity and profitability is not true?

• A)If a business is unable to pay its debts as they come due,it is operating unprofitably.
• B)A business may be liquid,yet operate unprofitably for several years.
• C)A business may operate profitably,yet be unable to meet its obligations.
• D)In order to survive in the long run,a business must both remain liquid and operate profitably.

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Definitions:

Export Demand

The demand for domestic goods and services in foreign markets.

Hedging

A risk management strategy used to offset potential losses in investments by taking an opposite position in a related asset.

Spot Exchange Rates

Spot exchange rates are the current exchange rates at which currencies can be traded immediately.

Foreign Exchange Risk

The risk of loss due to changes in currency exchange rates affecting the value of investments or financial transactions.