If a Company Has Excess Cash It Wishes to Return

question 51

True/False

If a company has excess cash it wishes to return to shareholders, it can do this by either distributing extra dividends or repurchasing stock.

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Definitions:

Total Variable Cost

The sum of all costs that vary with the level of output, such as materials and labor, distinct from fixed costs.

Economic Profit

The disparity between total sales and the combined total of explicit and implicit costs.

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit, determined by the point where marginal cost equals marginal revenue.

Purely Competitive Market

Describes a theoretical market structure featuring many buyers and sellers of a homogeneous good or service, with no single party able to manipulate prices due to the absence of market control.