Which of the Following Would Be a Reason for a Company

question 32

Multiple Choice

Which of the following would be a reason for a company to appropriate a portion of retained earnings?

• A)To increase the amount of earnings available for dividends
• B)To limit the amount of retained earnings available for dividends in order to retain sufficient funds for growth
• C)To ensure that the business does not take on too much debt
• D)To help the company control levels of operating expenses

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Definitions:

Financial Leverage

The use of borrowed funds to increase the potential return on investment, while also increasing the potential risk.

Leasing

A financial agreement in which one party (the lessor) grants another party (the lessee) the right to use an asset for a specified period in exchange for periodic payments.

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization.

Net Advantage

This term could be referring to various contexts and does not have a widely recognized specific financial definition without more context. NO.