Excursion Corp

question 118

Multiple Choice

Excursion Corp.increased its dollar amount of working capital over the past several years.To further evaluate the company's short-run liquidity,which one of the following measures should be used?

• A)The current ratio
• B)An analysis of the company's long-term debt
• C)An analysis of the return on stockholders' equity
• D)An analysis of retained earnings

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Definitions:

Residual Dividend Approach

Policy where a firm pays dividends only after meeting its investment needs while maintaining a desired debt–equity ratio.

Debt-Equity Ratio

A financial metric showing the mix of debt and equity used by a company to support its assets.

Investment Needs

The required capital an individual or organization needs to achieve financial goals.

Low-Dividend Clientele

Investors who prefer companies that offer lower dividend payments because they are in lower income tax brackets or have different investment goals.