It Is Important to Remember When Assessing the Financial Soundness

question 109

Multiple Choice

It is important to remember when assessing the financial soundness of a company that:

• A)if profits are adequate,there will be sufficient funds to pay salaries and fund cash flow.
• B)cash flow is the key financial element in determining financial soundness.
• C)revenues need to equal twice the debt load in order for the company to be viable.
• D)the buyer is buying the past revenues and profits of the company.

---

Definitions:

Unenforceable

A term that describes a contract or clause that cannot be legally enforced or compelled in court.

Usurious Interest

refers to the charging of excessively high or illegal rates of interest on loans.

Forfeit

To lose or give up something as a penalty for wrongdoing or failure to comply with certain conditions.

Legitimate Interest

A recognized reasonable ground that an organization may have for processing personal data without needing consent under certain data protection laws.