The Fire Triangle Includes Oxygen

question 3

True/False

The fire triangle includes oxygen.

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Definitions:

Residual Dividend Policy

A method where dividends are based on earnings minus capital expenditures and working capital needs; basically, dividends are paid from leftover or residual earnings.

Target Capital Structure

The mix of debt, preferred stock, and common equity with which the firm plans to finance its investments. Companies often target a specific structure to optimize their cost of capital.

Capital Requirements

The amount of capital a bank or financial institution must hold to meet regulatory requirements and cover potential losses.

Dividend Payment

A distribution of a portion of a company's earnings to shareholders, typically in the form of cash or additional stocks.