In Order for Investors and Creditors to Decide Whether to Invest

question 12

Multiple Choice

In order for investors and creditors to decide whether to invest in a company or loan a company funds they should do all of the following except:

• A)Analyze financial statements for the company.
• B)Focus on corporate governance of the company.
• C)Rely on assurances of reliability by the company's leaders.
• D)Compute profitability,liquidity,and leverage ratios for the company.

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Definitions:

Slippery Slope

A fallacy in reasoning that suggests taking a minor action will lead to major and oftentimes undesirable consequences.

Gratuities

Small gifts, often money, given in appreciation for service, which can sometimes raise ethical concerns in professional relationships.

Police

A body of officers representing the civil authority of government, responsible for maintaining public order and safety, enforcing laws, and preventing, detecting, and investigating criminal activities.

Rotten Apple Theory

A theory suggesting that corrupt or unethical individuals within an organization are isolated instances and not representative of systemic organizational issues.