While External Funding Needs Can Be Approximated by Subtracting Cash

question 13

Multiple Choice

While external funding needs can be approximated by subtracting cash dividend payments from cash flow from operations,the decision is not simple because

• A) dividend policy is not fixed
• B) there are legal costs to raising capital externally than by retaining internal cash flow
• C) The Securities Act of 1933 only allows external capital to be raised during certain months of the year.If a firm needs funds at another time it must use internal sources.
• D) None of the above
• E) both (a)and (b)

---

Definitions:

Nonsteroidal

Refers to drugs that are not steroids, often used to reduce inflammation or pain without the effects of steroids.

Glucagon

A hormone produced by the pancreas that raises blood glucose levels, acting as a critical counter-regulatory hormone to insulin.

Thyroid

A gland in the neck that produces hormones regulating growth and metabolism.

Adrenal

Pertaining to the adrenal glands, small glandular organs located above the kidneys that produce hormones like adrenaline and corticosteroids.