A firm that does not earn the cost of capital in the short run will probably be in bankruptcy.
Proper management of the sources of capital can allow a firm to survive short-term interruptions in its income stream.

Question

Quizplus · Accepted Answer

While a firm may struggle in the short run if it does not earn the cost of capital, it does not necessarily mean that it will go bankrupt. Proper management of sources of capital and financial planning can help a firm weather temporary financial setbacks.

A Firm That Does Not Earn the Cost of Capital