Which of the Following Will Probably Not Be a Result

question 8

Multiple Choice

Which of the following will probably not be a result if a company's liquidity is poor?

• A)Workers will quit if they are not paid on time.
• B)Debt and/or equity will exceed the company's maximum allowed amount.
• C)Banks may not loan the company funds.
• D)Customers will seek other sources of goods when the company's product is not available.

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Definitions:

Optimal Capital Budget

The set of projects that maximizes the value of the firm.

Retained Earnings

The portion of a company’s net profits which is kept within the company instead of being paid out to the shareholders as dividends.

Dividend Reinvestment Plans

Programs that allow investors to automatically reinvest their cash dividends into additional shares or fractional shares of the underlying stock.

Open Market

A freely competitive market where buyers and sellers can engage in transactions with minimal government intervention.