All Else Constant, the Cash Flow to Stockholders

question 356

Multiple Choice

All else constant, the cash flow to stockholders:

• A) Increases when the dividends per share are increased.
• B) Remains unchanged when the firm repurchases shares of outstanding stock.
• C) Increases when a firm increases its degree of financial leverage.
• D) Increases when the cash flow from assets decreases.
• E) Increases as the common stock account balance increases.

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Definitions:

Lead Time

The timeframe between the initiation and completion of a process, such as from placing an order to its delivery.

Re-Order Point

The inventory level at which an order should be placed to replenish stock before it runs out, based on lead time and consumption rate.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices at a given time.

Optimal Order Size

The quantity that minimizes the total cost of inventory, including holding and ordering costs.