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Home / Questions / If a company does not pay dividends to shareholders, it may be because a.its an

If a company does not pay dividends to shareholders, it may be because a.its an

 

 

31.If a company does not pay dividends to shareholders, it may be because

a.its an emerging market

b.the Board of Directors needs the money

c.it needs to use the cash to finance the acquisition of assets

d.the shareholders need to purchase were stock

 

 

 

32.A company will increase risk if it

a.issues stock and has to pay dividends

b.borrows money and has to pay interest

c.reinvests its earnings

d.increases its current ratio by delaying payments to suppliers

 

 

 

33.Which of the following ratios is a measure of liquidity?

a.debt to assets

b.assets to equity

c.current assets to current liabilities

d.dividend payout

 

 

 

34.You have computed a firm's dividend payout ratio for the past seven years as follows (2013 is the most recent year):

 

2013201220112010200920082007

63.2%65.1%57.9%48.2%55.1%37.4%25.2%

 

One possible explanation for this situation is that the firm

a.is in a high technology industry and is earning very high profits

b.has few profitable opportunities in which to reinvest profits

c.is using more and more of its capital to finance expanding operations

d.has resold all its treasury stock holdings over the period shown

 

 

 

35.If a company uses cash to purchase equipment,

a.financial leverage will increase

b.financial leverage will decrease

c.financial leverage will remain unchanged

d.the effect on financial leverage cannot be determined

 

 

 

36.American Enterprises has bonds payable and common stock outstanding. Which of the following can lead to bankruptcy for the firm?

 

Failure to make                   Failure to

interest payments              pay dividends

a.Yes                            Yes

b.Yes                            No

c.No                             Yes

d.No                             No

 

 

 

37.Clean Diapers delivery services purchased a delivery truck by making a $1,000 down payment and signing a note payable for the balance. What effect will this have on the firm's financial leverage?

a.financial leverage will increase

b.financial leverage will decrease

c.financial leverage will remain unchanged

d.the effect on financial leverage cannot be determined

 

 

 

38.Which of the following would NOT be included in an analysis of a firm's capital structure?

a.retained earnings

b.common stock

c.current assets

d.current liabilities

 

 

 

39.Which of the following would indicate a low amount of financial leverage?

a.high debt to equity ratio

b.low debt to assets ratio

c.low return on equity

d.high return on equity

 

 

 

40.Return on equity for Norris company is 7%. This means that

a.Norris will pay a dividend of $0.07 on each share of common stock

b.the market value of Norris's common stock will increase by 7%

c.Norris earned $0.07 for each dollar of investment

d.the book value of Norris's common stock will increase by 7%

 

Dec 25 2019 View more View Less

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