Choose the correct definition for financial stability.
A)The ability to produce cash from the business to meet current obligations
B)The ability to meet long-term obligations as they fall due for payment
C)The ability of the business to continue to operate profitably
D)The ability of the business to borrow further funds if needed

Question

Quizplus · Accepted Answer

Financial stability refers to a business's ability to meet its long-term obligations as they fall due for payment. This includes having a sustainable level of debt, a healthy cash flow, and sufficient assets to cover liabilities in case of unexpected events. It allows the business to operate without the risk of bankruptcy or insolvency. The other options (A, C, and D) are important factors in financial management, but they do not fully encompass the concept of financial stability.

Choose the Correct Definition for Financial Stability