How Managers Choose to Finance the Business Does Not Affect

question 71

True/False

How managers choose to finance the business does not affect the rate of return to shareholders because the rate of return is based on how the company uses the assets it has,not whether or not they paid for the assets with debt or equity.

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Definitions:

Temporary Excess Cash

Surplus cash not required for immediate operational or investment needs, often invested in short-term securities.

Invest

The act of allocating resources, usually money, in order to generate an income or profit.

Additional Staff

The employment of extra personnel beyond the current number to meet increased demands or to fulfill specific roles within an organization.

Total Collection Time

The total period it takes for a business to convert its accounts receivable into cash.