The Ability to Generate Future Revenues and Meet Long-Term Obligations

question 134

Multiple Choice

The ability to generate future revenues and meet long-term obligations is referred to as:

• A) Liquidity and efficiency.
• B) Solvency.
• C) Profitability.
• D) Market prospects.
• E) Creditworthiness.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue, indicating the company's overall profitability.

Statement of Cash Flows

A financial report that shows the cash generated and used by a company during a specific period, classified into operating, investing, and financing activities.

Operating Activities

Activities that are directly related to the primary operations of a company, such as manufacturing, distributing, marketing, and selling a product or service.

Retained Earnings

The amount of net income left over for the business after it has paid out dividends to its shareholders.