Which One of the Following Policies Most Directly Affects the Projection

question 50

Multiple Choice

Which one of the following policies most directly affects the projection of the retained earnings balance to be used on a pro forma statement?

• A)net working capital policy
• B)capital structure policy
• C)dividend policy
• D)capital budgeting policy
• E)capacity utilization policy

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Definitions:

Cash Coverage Ratio

A metric that measures a company's ability to pay its interest obligations with its cash before deducting interest and taxes.

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence over time.

Days to Sell Inventory

A financial metric measuring the average number of days a company takes to sell its inventory.