When the Firm Earns Lower-Than-Average Returns,the Highest Priority Is Given

question 137

True/False

When the firm earns lower-than-average returns,the highest priority is given to satisfying the needs of capital market stakeholders over the needs of product market and organizational shareholders.

---

Definitions:

Cumulative Dividends

Dividend payments that must be paid out to preferred shareholders before any dividends can be issued to common shareholders.

Consolidated Balance Sheet

A balance sheet that provides a financial snapshot of a parent company and its subsidiaries as one single entity, consolidating all assets, liabilities, and equity.

Equipment

Tangible property used in the operation of a business that is not intended for sale in the ordinary course of business.

Acquisition Differential

The disparity between the acquisition cost and the fair market value of the identifiable net assets obtained.