Cash Flow to Stockholders Must Be Positive When

question 79

Multiple Choice

Cash flow to stockholders must be positive when:

• A)the dividends paid exceed the net new equity raised.
• B)the net sale of common stock exceeds the amount of dividends paid.
• C)no income is distributed but new shares of stock are sold.
• D)both the cash flow to assets and the cash flow to creditors are negative.
• E)both the cash flow to assets and the cash flow to creditors are positive.

---

Definitions:

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor.

Profit and Loss Statement

A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period, typically a fiscal quarter or year.

CVP Analysis

Cost-Volume-Profit Analysis, a tool used to determine how changes in costs and volume affect a company's profits.

Variable Cost

Expenses that vary directly with the level of production or sales, such as materials or labor.