Which One of the Following Statements Is NOT True About

question 4

Multiple Choice

Which one of the following statements is NOT true about the general dividend valuation model?

• A) The model does not assume any specific pattern for dividend growth.
• B) It makes a specific assumption about when the share is going to be sold in the future.
• C) The model calls for forecasting an infinite number of dividends for a share.
• D) All of the above are true.

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Definitions:

Outstanding Accounts Receivable

The amount of money owed to a company by its customers for goods or services delivered but not yet paid for.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that is expected to become uncollectible.

Percent of Sales Method

A forecasting technique used in financial planning to estimate certain balance sheet and income statement accounts based on projected sales growth.

Bad Debts

Amounts owed to a company that are not expected to be received, often due to customers being unable to pay.