Question

Most businesses fail because their_____dries up. A) net working capital B) cash flow C) liabilities D)...

Most businesses fail because their_____dries up.

A)

net working capital

B)

cash flow

C)

liabilities

D)

tax shield
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Answer #1

Option a, net working capital measures the business‘ ability to pay off its current liabilities using current assets.

option b, cash flow is the cash and cash equivalents a business has.

Option c, liabilities refers to the financial obligations a business has.

Option d, tax shield is the reduction in income tax from taking an allowance from taxable income.

A positive cash flow creates value for a business, reinvest in the business and settle debts.

Hence, the answer is option b.

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