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A Company That Produces Racing Motorbikes Has Several Models That

question 79

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A company that produces racing motorbikes has several models that sell well within the motorcycle racing community and which are very profitable for the company. Despite having a profitable product, why must this company take care to ensure that it has sufficient cash on hand to meet its obligations?


Definitions:

Dividends Per Share

The amount of dividends that a company pays out to its shareholders for each share held, typically expressed on an annual basis.

Growth In Dividends

An increase in the amount of dividends paid out to shareholders over time, indicating a company's growing profitability and stability.

Market Index

A theoretical portfolio of investments representing a segment of the financial market, used as a benchmark to measure the performance of investments.

P/E Ratio

The Price to Earnings ratio, a valuation metric for stocks calculated by dividing the market price per share by its earnings per share.

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