When Replacing Old Assets with New Assets, It Is Safe

question 7

True/False

When replacing old assets with new assets, it is safe to assume that working capital requirements will remain the same.

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Definitions:

Dividends Per Share

The amount of dividends paid out to shareholders per share of the company’s stock.

Financial Leverage

The use of borrowed funds in an attempt to increase the return on equity, involving higher risk but potentially higher returns as well.

Free Cash Flow

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Capital Structure

The mixture of debt and equity financing a company uses to fund its operations and grow its business.