If a Corporation Uses Retention of Earnings to Finance the Purchase

question 19

Multiple Choice

If a corporation uses retention of earnings to finance the purchase of property instead of issuing equity securities, then

• A)the debt/equity ratio will be the same under both options.
• B)it will pay more dividends.
• C)leverage is being used.
• D)a company's earnings per share will decrease.

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Definitions:

Idiosyncrasy Credits

The leeway or tolerance granted to individuals for deviating from group norms due to their previously established competence or contributions.

Followership

The behaviors and attitudes of individuals who follow and support their leaders, highlighting the importance of active and effective participation in a leadership context.

Implicit Followership Theories

Individual beliefs or assumptions about the traits and behaviors that characterize followers, affecting leadership interaction and expectations.

Power Distance Orientation

A cultural dimension that describes the extent to which less powerful members of organizations and institutions accept and expect power to be distributed unequally.