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When We Make Judgments About the Behavior of Other People

question 110

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When we make judgments about the behavior of other people, we tend to underestimate the influence of external factors and to overestimate the influence of internal factors. This tendency is called the self-serving bias.

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Definitions:

Total Assets

The sum of all financial and physical resources owned by a business.

Vertical Analysis

A financial statement analysis method where each line item is listed as a percentage of a base figure within the statement, facilitating comparisons.

Current Liabilities

Current liabilities are financial obligations a company owes and is expected to pay within a year.

Working Capital

The excess of the current assets of a business over its current liabilities.

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