A Manager States That "We Must Be Creating Wealth

question 10

Multiple Choice

A manager states that "We must be creating wealth. To do so we're creating steady growth in earnings." What would you reply?

• A) "That only creates wealth if the rate of return on the additional investment is greater than the required rate."
• B) "Wealth creation is occurring, but the company would do better if we focused on cash flow."
• C) "That's right."
• D) "Growth in earnings is only relevant if it occurs without investment."