Which of the following best characterizes this firm’s policy of financing assets? a)Relaxed policy b)Moderate policy c)Restricted policy Note the shaded region on the preceding graph. Which of the following statements best describes the firm’s situation during this time? a) The firm has excess capital to invest in cash or marketable securities. b) The firm must rely on short-term borrowing. The impact of working capital management on return on equity Considering all else remains constant, if a firm is using a restricted policy of financing assets, it will have a (____) level of assets, a (___) assets turnover ratio, and consequently, a (___) return on equity.
Which of the following best characterizes this firm’s policy of financing assets? a)Relaxed policy b)Moderate policy c)Restricted policy Note the shaded region on the preceding graph. Which of the following statements best describes the firm’s situation during this time? a) The firm has excess capital to invest in cash or marketable securities. b) The firm must rely on short-term borrowing. The impact of working capital management on return on equity Considering all else remains constant, if a firm is using a restricted policy of financing assets, it will have a (____) level of assets, a (___) assets turnover ratio, and consequently, a (___) return on equity.
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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Question
Which of the following best characterizes this firm’s policy of financing assets?
a)Relaxed policy
b)Moderate policy
c)Restricted policy
Note the shaded region on the preceding graph. Which of the following statements best describes the firm’s situation during this time?
a) The firm has excess capital to invest in cash or marketable securities.
b) The firm must rely on short-term borrowing.
The impact of working capital management on return on equity
Considering all else remains constant, if a firm is using a restricted policy of financing assets, it will have a (____) level of assets, a (___) assets turnover ratio, and consequently, a (___) return on equity.
Expert Solution
Step 1
Financial Management: Financial management comprises of two words i.e. Finance and management.
Therefore in layman’s words, financial management is the management of the finance or funds in an organization.
Any firm can raise the fund from the market either in the form of Equity or in the form of debt, but the firm which manages the fund in a better way results in better performance in the marketplace.
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