Typically,all Other Things Equal,a Profitable Company That Pays Little or No

question 21

Multiple Choice

Typically,all other things equal,a profitable company that pays little or no dividends:

• A)is a bad investment.
• B)will reinvest profits which can lead to greater growth potential.
• C)will experience relatively stable stock prices over time.
• D)all of the answers are acceptable.

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Definitions:

Net Fixed Assets

The value of a company's property, plant, and equipment minus depreciation, indicating the tangible assets used in operations.

Receivables Turnover

A ratio that measures a company's efficiency in collecting its sales on credit over a period of time.

Accounts Receivable

Funds owed to a company by customers for products or services that have been delivered or used but not yet paid for.

Equity Multiplier

This financial ratio measures a company’s total assets financed by stockholders, indicating the leverage level relative to equity.