As Long as a Firm Is Generating Positive Net Income

question 137

True/False

As long as a firm is generating positive net income each year it need not be concerned with working capital management because it will always be able to meet all short-term liquidity needs.

---

Definitions:

Holders of Record

Registered owners of a security at a specific point in time, often used to determine who is entitled to dividends or rights distributions.

Dividend Payable

The amount declared by a company’s board of directors to be distributed among shareholders at a set date in the future.

Residual Dividend Policy

A strategy where dividends are based on the earnings left over after all project capital needs are met.

Debt-Equity Ratio

The ratio that measures the relative proportion of shareholders' equity and debt used to finance a company's assets.