- CFA Exams
- CFA Exam: Level I 2021
- Study Session 6. Financial Reporting and Analysis (1)
- Reading 19. Introduction to Financial Statement Analysis
- Subject 2. Major Financial Statements
CFA Practice Question
True or False? Profitability means having enough cash available to pay debts when they are due.
Correct Answer: False
Profitability means the ability to earn enough income to attract and hold investment capital. Liquidity means having enough cash available to pay debts when they are due.
User Contributed Comments 8
| User | Comment |
|---|---|
| tomn | Liquidity means the ability to meet short term obligations. Solvency is the ability to meet long term obligations. Profitability: acquiring an excess of capital over expenses. |
| Vikku | Great explanation tomn. |
| bantoo | brilliant analysis tomn! |
| ldfrench | tomm, are you Benjamin Franklin? YOU ARE A GENIUS!!!!!!! |
| lhp112 | Thanks Tomn |
| urzzz | SuperTomn |
| F79KHAN | Thank you Tom that was a great breakdown. Liquidity: Meet Short Term Obligation Solvency: Long Term Profitability: Additional Capital over Expenses <3 |
| alexa821 | people in this study session have much better jokes than in FI and derivatives..I wonder why |