By concentrating on cash flows within a firm, the financial manager should be able to ________.
A) prepare tax returns
B) control the share price
C) avoid insolvency
D) maintain public relations

Question

Quizplus · Accepted Answer

By concentrating on cash flow, the financial manager can ensure that the firm has enough liquidity to meet its financial obligations, including paying creditors, employees, and investors. This can help the firm avoid insolvency, which occurs when a company cannot pay its debts as they come due. Thus, option C is the best choice. Option A is incorrect because tax returns are typically prepared by accountants, not financial managers. Option B is incorrect because share price is affected by many factors beyond just cash flows, such as market sentiment, company performance, and macroeconomic conditions. Option D is incorrect because maintaining public relations is typically the job of the marketing or public relations department, not the financial manager.

By Concentrating on Cash Flows Within a Firm, the Financial