Regarding the Use of Funds Generated Within the Firm

question 181

Multiple Choice

Regarding the use of funds generated within the firm:

• A) Reinvesting cash generated from operations is usually more expensive than borrowing money.
• B) A company with a product that has significant growth potential should invest the earnings from that product to salvage declining products.
• C) Indirect distribution usually requires more investment capital for a producer than does direct distribution.
• D) When finances are tight, companies should look for strategy alternatives that help get a better return on money already invested.
• E) All of these.

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Definitions:

Operating Cash Flow

A measure of the cash generated by a company's normal business operations.

Amortization

The process of gradually writing off the initial cost of an asset over a period, typically for intangible assets such as patents or goodwill.

Intangible Assets

Long-term assets that are used in the operations of a business, are not held for sale, and are without physical qualities.

Spreadsheet Method

A computational approach that utilizes a software program or application designed for organizing, calculating, and managing data in columns and rows.