When a Firm Reinvests Some of Its Net Income Rather

question 110

Multiple Choice

When a firm reinvests some of its net income rather than distributing it all to owners, what is the result?

• A) an increase in covenants
• B) an increase in net liabilities
• C) an increase in retained earnings
• D) an increase in dividends

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Definitions:

Production Possibility Frontier

An illustration indicating the top production capabilities for a pair of items, given certain inputs like resources.

Productivity

A measure of the efficiency of production, often quantified as the ratio of outputs to inputs in the production process.

Capital Stock

Capital Stock represents the total physical or financial assets that a company utilizes for production, including buildings, machinery, and equipment.

Production Possibility Frontier

An illustration representing the peak production capabilities of two items, based on available resources.