A Financial Manager Is Interested in the Cash Inflows and Outflows

question 109

Multiple Choice

A financial manager is interested in the cash inflows and outflows of a firm, rather than the accounting data, in order to ________.

• A) ensure profitability
• B) maintain healthy public relations
• C) ensure timely payment of taxes
• D) maintain an optimum solvency level

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Definitions:

Flotation Costs

The costs associated with the process of raising new capital through the sale of stocks or bonds to investors, including advisory, legal, and promotional expenses.

Preferred Stock

Preferred stock is a type of stock that confers certain privileges or priorities to its holders, such as fixed dividends and priority over common stock in asset liquidation.

Par Value

The face value of a bond or stock, as stated by the issuing company; it is often a nominal figure that does not necessarily equate to the market value.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders.