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If a company earns profit but does not plan to repay debt which objective is at risk?

Answer and explanation

Correct answer: Long-term survival

Long-term survival is correct. Failure to repay debt can damage the firm’s creditworthiness, restrict future finance, and create legal or cash-flow difficulties. These risks can make it difficult for the business to continue operating in the future. Profit earning is the closest distractor, but the question already states that the company is earning profit. Exam tip: Distinguish survival, profit, and growth as separate organisational objectives of management.

Related tags

Management ObjectivesLong-Term SurvivalDebt RepaymentOrganisational ObjectivesBusiness Studies Class 12Objectives Of ManagementNature And Significance Of ManagementBusiness Studies

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