Cash Flow to Creditors Must Increase When

question 375

Multiple Choice

Cash flow to creditors must increase when:

• A) A firm increases its long-term debt by more than its interest expense in any given year.
• B) The cash flow to stockholders is constant and the cash flow from assets increases.
• C) The operating cash flow increases and the cash flow to stockholders decreases.
• D) The interest rate on the firm's debt decreases.
• E) A firm borrows more than it repays in any one given year.

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Definitions:

Demand Function

A mathematical equation that describes the quantity of a good or service demanded at various prices.

Consumer's Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually pay.

Mead

An alcoholic beverage created by fermenting honey with water, sometimes with various fruits, spices, grains, or hops included.

Demand Function

A mathematical expression that describes the relationship between the quantity demanded of a good or service and its determinants such as price, income, and prices of related goods.