Firms in Need of Financing Tend to Use External Funds

question 64

True/False

Firms in need of financing tend to use external funds first and then revert to internal funds,or retained earnings,as a last resort.

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Definitions:

Portfolio Management

The process of making investment decisions by allocating assets among securities, sectors, or industries to optimize returns.

Reported Earnings

The profits announced by a corporation, reflecting the financial performance over a specific period, usually a fiscal quarter or year.

GAAP's Flexibility

The allowance within Generally Accepted Accounting Principles for interpretation or adaptation to different situations, providing certain leeway in financial reporting.

Accounting Principles

The rules and guidelines that companies must follow when reporting financial data and statements, ensuring transparency and fairness in financial reporting.