If a Firm Has Significant Free Cash Flows (FCF)it Could

question 41

Multiple Choice

If a firm has significant free cash flows (FCF) it could likely:

• A) become a takeover target
• B) see a drop in stock price
• C) have an excessively low debt/equity ratio
• D) reinvest more in itself by reducing its dividend payouts (plowback)

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Definitions:

Quantity of Output

Relates to the total amount of goods or services produced by a firm, industry, or economy within a specific time period.

Expected Price Level

The anticipation or forecast of the average level of prices of goods and services in the economy in the future.

Short-Run Aggregate Supply

Short-Run Aggregate Supply represents the total production of goods and services in an economy at a specific time, considering variable production costs and fixed capital.

Unemployment Rate

The percentage of people in the labor force who are unemployed and are actively trying to find a job.