When Retained Earnings Are Not Enough to Meet Their Long-Term

question 365

Multiple Choice

When retained earnings are not enough to meet their long-term funding needs, businesses may be able to raise funds by

• A) selling common stock.
• B) petitioning the government for a loan.
• C) purchasing additional assets.
• D) decreasing their accounts payable.

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Definitions:

Tax Rates

The percentage at which an individual or corporation is taxed, applied to income or transactions.

Potential GDP

The highest level of economic output that an economy can sustain over the long term without increasing inflation.

Capital Spending

Expenditure by businesses on physical assets like buildings, machinery, and equipment to enhance their capacity or efficiency.

Privatization

The process of turning government enterprises into private enterprises.