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.

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Definitions:

Goal-Setting Theory

A psychological theory that suggests specific and challenging goals along with appropriate feedback contribute to higher and better task performance.

Rewards

Benefits, either tangible or intangible, given in recognition of one's service, effort, or achievement.

Goal Accomplishment

The achievement of pre-set objectives within a specified time frame.

Self-Efficacy Theory

A psychological theory that suggests individuals' belief in their ability to succeed affects their motivation and performance in tasks.