When Evaluating the Liquidity of a Proprietorship,creditors Will Likely Base

question 10

Multiple Choice

When evaluating the liquidity of a proprietorship,creditors will likely base their decision on:

• A)The business ability to generate a profit.
• B)Previous debts of the business.
• C)The financial strength of the owner.
• D)The total assets owned by the business.

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Definitions:

Reciprocity

A mutual exchange of privileges, goods, or services between two parties, based on a principle of giving and receiving in equal measure.

Payoffs

The returns or benefits received from a particular action or investment.

Kinked-Demand Curve

A theory in economics suggesting that a firm's price will be rigid and unlikely to change because competitors will match price decreases but not price increases.

Oligopolistic Firms

Companies that operate in a market structure characterized by a small number of entities dominating the industry, influencing prices and market conditions.