Which of the Following Statements Is False Regarding Profitable and Unprofitable

question 71

Multiple Choice

Which of the following statements is false regarding profitable and unprofitable growth?

• A)If a firm wants to increase its share price,it must cut its dividend and invest more.
• B)If the firm retains more earnings,it will be able to pay out less of those earnings,which means that the firm will have to reduce its dividend.
• C)A firm can increase its growth rate by retaining more of its earnings.
• D)Cutting the firm's dividend to increase investment will raise the stock price if,and only if,the new investments have a positive NPV.

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Definitions:

Management By Exception

A management strategy where leadership steps in only when performance deviates significantly from standards, focusing on the exceptions rather than routine operations.

Price Variance

The difference between the actual price paid for something and its standard or expected price, often analyzed in cost accounting.

Quantity Variance

The difference between the expected and actual quantity of materials used in production, reflecting efficiency in material usage.

Direct Materials

The raw materials directly used in the manufacturing of a product.