Which of the Following Statements Is FALSE

question 25

Multiple Choice

Which of the following statements is FALSE?

• A)Under the Modigliani-Miller assumptions of perfect capital markets,the amounts of payables and receivables are irrelevant.
• B)One factor that contributes to the length of a firm's receivables and payables is the delay between the time a bill is paid and the cash is actually received.
• C)Collection float is the amount of time it takes before payments to suppliers actually result in a cash outflow for the firm.
• D)The credit that the firm is extending to its customer is known as trade credit.

---

Definitions:

Cash Dividend

A financial disbursement by a corporation to its stockholders, often as part of the company's profit sharing.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, increasing the number of outstanding shares.

Common Stock

Equity ownership in a corporation, entitling holders to vote on corporate matters and receive dividends.

Stock Split

A measure taken by a company to split its current shares into numerous ones, aiming to increase the shares' liquidity.