Introduction to working capital
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Questions and Answers

When should management consider returning some or all of the excess cash to shareholders as dividends?

  • When the company's revenue is declining
  • When the company is planning to acquire a competitor
  • When the company's stock price is high
  • When there are no NPV positive opportunities and excess cash surplus is not needed (correct)

    • What influences the decision of whether to issue dividends or not?

  • The company's debt-to-equity ratio and current liabilities
  • The company's market share and short-term earning power
  • The company's research and development expenditure
  • The company's unappropriated profit and long-term earning power (correct)

    • What action is management expected to take when cash surplus exists and is not needed by the firm?

  • Hold onto the surplus cash indefinitely
  • Donate the surplus cash to charity
  • Pay out some or all of those surplus earnings in the form of cash dividends or repurchase the company's stock (correct)
  • Invest the surplus cash in high-risk ventures

    • What do shareholders of a 'growth stock' typically expect the company to do with its earnings?

    <p>Retain most of the earnings to fuel further growth</p> Signup and view all the answers

    In what scenario should management consider repurchasing the company's stock through a share buyback program?

    <p>When cash surplus exists and is not needed by the firm</p> Signup and view all the answers

    Which of the following is an example of a visible inherited trait?

    <p>Eye color</p> Signup and view all the answers

    What is the reason for tall and thin people tending to have tall and thin children?

    <p>Inheritance through genes</p> Signup and view all the answers

    How can a child who inherited the tendency of being tall still end up being short?

    <p>Height influenced by nutrition</p> Signup and view all the answers

    Which statement best describes the study of genetics?

    <p>It tries to explain how traits are inherited and passed from generation to generation</p> Signup and view all the answers

    What is an example of a trait influenced by both genes and the environment?

    <p>Height</p> Signup and view all the answers

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