Future Business Leaders of America (FBLA) Agribusiness Practice Test

What factor is critical for assessing the feasibility of a business plan?

1. Market share targets

2. Liquidity and repayment capacity

3. Current employee turnover trends

4. Advertising budget

The correct answer is: Liquidity and repayment capacity

Assessing the feasibility of a business plan relies heavily on liquidity and repayment capacity because these factors determine whether a business can meet its short-term financial obligations and sustain operations. Liquidity refers to the availability of cash or easily convertible assets to cover expenses and unexpected costs, which is crucial for maintaining operational stability. Repayment capacity, on the other hand, evaluates whether a business can meet its debt obligations based on projected income and cash flow. Together, these elements provide a clear picture of the business's financial health and its ability to survive and thrive in its intended market. While market share targets, employee turnover trends, and advertising budgets are important aspects of a business strategy, they do not directly address the fundamental financial groundwork necessary for a plan's viability. Market share targets focus on competitive positioning, employee turnover trends relate to human resource management, and advertising budgets pertain to marketing strategies rather than the immediate financial realities that impact the organization's sustainability.