Which of the Following Factors Could Explain Why Regal Industrial

question 9

Multiple Choice

Which of the following factors could explain why Regal Industrial Fixtures had a negative net cash flow provided (used) by operations year, even though the cash on its balance sheet increased?

• A) The company repurchased 20% of its common stock.
• B) The company sold a new issue of bonds.
• C) The company made a large investment in new plant and equipment.
• D) The company paid a large dividend.
• E) The company issued preferred stock.

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Definitions:

External Funds

Capital that comes from outside of a company, including debt financing and equity financing from external investors.

Sales Increase

The rise in the volume or value of sales of goods or services over a specified period compared to a previous period.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and earnings without borrowing new funds or seeking additional investment.

Retention Ratio

The proportion of net income that is retained by a company, rather than distributed to shareholders as dividends.