The Theory That Argues That Dividends That the Firm Has

question 110

Multiple Choice

The theory that argues that dividends that the firm has committed to pay are less risky to risk-averse investors than are potential future capital gains is referred to as:

• A)dividend irrelevance theory.
• B)bird-in-the-hand theory.
• C)residual dividend model.
• D)none of these.

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Definitions:

Receivables Turnover

A financial metric indicating how quickly a company collects payments from its customers, calculated as sales divided by accounts receivable.

Cash Cycle

The period between the outlay of cash for purchases and the collection of cash from customers in a business.

Inventory Turnover

A ratio showing how many times a company has sold and replaced inventory over a period.

Accounts Payable Turnover

A financial ratio that measures the rate at which a company pays off its suppliers by comparing net purchases to average accounts payable during a period.