Which of the following commonly results in the financial failure of a firm?
A) Diversification
B) Undercapitalization
C) Control of expenses
D) Management of cash flows

Question

Quizplus · Accepted Answer

Undercapitalization, which means having insufficient funds, is one of the most common reasons for financial failure of a firm. It can lead to the inability to pay bills, invest in growth, or meet unexpected expenses, ultimately leading to bankruptcy. While diversification, control of expenses, and management of cash flows are also important factors in financial success, they are not as directly tied to the failure of a firm as undercapitalization.

Which of the Following Commonly Results in the Financial Failure