Which of the Following Statements Is False

question 59

Multiple Choice

Which of the following statements is false?

• A) A firm must therefore balance the tax costs of holding cash with the potential benefits of having to raise external funds in the future.
• B) Paying out excess cash through dividends or share repurchases can boost the stock price by reducing managers' ability and temptation to waste resources.
• C) If there is a reasonable likelihood that future earnings will be insufficient to fund future positive-NPV investment opportunities, a firm may start accumulating cash to make up the difference.
• D) According to the managerial entrenchment theory of payout policy, managers pay out cash only when pressured to do so by the firm's investors.

---

Definitions:

Cycle Inventory

The portion of inventory that is replenished regularly based on the demand and supply cycle of the business.

Cycle Inventory

The quantity of inventory available to meet normal demand between shipments in a replenishment cycle.

Supply Chain

A network of organizations, people, activities, information, and resources involved in producing and delivering a product or service from supplier to customer.

Occupancy Cost

The total expense incurred for occupying a physical space, including rent, utilities, taxes, and maintenance.