Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company. To respond: to the policy as a public shareholder.

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Assume that the president of Freeman Industries Inc. made the following statement in the Annual Report to Shareholders: "The founding family and majority shareholders of the company do not believe in using debt to finance future growth. The founding family leamed from hard experience during Prohibition and the Great Depression that debt can cause loss of flexibility and eventual loss, corporate control. The company will not place itself at such risk. As such, all future growth will be financed either by stock sales to the public or by internally generated resources." As a public shareholder of this company, how would you respond to this policy?

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Chapter 17, Problem 17.1CP

To determine

Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

To respond: to the policy as a public shareholder.

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Assume that the president of Freeman Industries Inc. made the following statement in the Annual Report to Shareholders: "The founding family and majority shareholders of the company do not believe in using debt to finance future growth. The founding family leamed from hard experience during Prohibition and the Great Depression that debt can cause loss of flexibility and eventual loss, corporate control. The company will not place itself at such risk. As such, all future growth will be financed either by stock sales to the public or by internally generated resources." As a public shareholder of this company, how would you respond to this policy?

The president of Freeman Industries Inc. made the following statement in the annual report to shareholders: “The founding family and majority shareholders of the company do not believe in using debt to finance future growth. The founding family learned from hard experience during the Great Depression that debt can cause loss of flexibility and eventual loss of corporate control. The company will not place itself at such risk again.As such, all future growth will be financed either by stock sales to the public or by internally generated resources.”Write a brief memo to the company’s president, Boss Freeman, outlining the errors in his logic.

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