All else the same, which of the following management decisions would help alleviate the problem of a buildup of excess cash? O Increase credit terms to customer; i.e. allow them more time to pay O Borrow short term to increase the size of the Interest Tax Shield O Reduce credit terms to customers: i.e. make them pay sooner O Reduce the dividend payout ratio to create higher levels of retained eamings
All else the same, which of the following management decisions would help alleviate the problem of a buildup of excess cash? O Increase credit terms to customer; i.e. allow them more time to pay O Borrow short term to increase the size of the Interest Tax Shield O Reduce credit terms to customers: i.e. make them pay sooner O Reduce the dividend payout ratio to create higher levels of retained eamings
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:All else the same, which of the following management decisions would help alleviate the problem of
a buildup of excess cash?
O Increase credit terms to customer; i.e. allow them more time to pay
Borrow short term to increase the size of the Interest Tax Shield
O Reduce credit terms to customers: i.c. make them pay sooner
O Reduce the dividend payout ratio to crcate higher levels of retained earnings
In evaluating the accuracy of your forecast, which of the following might be indicative of the need
for a revised forecast?
O The company's Dividend Payout Ratio is likely too high in the forecast period
O The growth rate of Sales is trending toward 4-5% over the forecast period
O The ratio of Sales/(Invested Capital) is much higher in the forecast period than in the Historical period from
which you derived your forecast
O The firm's Forecast D/E ratio is holding steady over the course of the forecast
An effective financial plan can be either static or dynamic (True or False)
O True
False
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