What the firm financial managers need to evaluate

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Reference no: EM132555148

Question 1: The agency cost model of dividends suggests

Select one:

A. Dividends should be smaller for slowly growing firms with large free cash flow

B. Dividends are a "cost" of corporate form of organisation

C. Dividend payments reduce managers' opportunity to spend free cash flow'

D. Managers seeking to increase share value should never pay dividends.

Question 2: A firm that moves from traditional inventory stocking methods to a just-in-time (JIT) system should expect to see:

Select one:

A. Its inventory turnover decrease and its average age of inventory increase

B. Its inventory turnover increase and its average age of inventory decrease

C. Its inventory turnover increase and its average age of inventory increase

D. Its inventory turnover decrease and its average age of inventory decrease

Question 3: Smith Products is considering changing its credit terms from net 30 to 2/10 net 30.

The firm's financial managers need to evaluate:

Select one:

A. the reduced level of bad debt expense as customers pay sooner

B. the increased contribution margin as customers pay sooner

C. the increased level of bad debt expense as customers pay much later

D. the increased investment in accounts receivable to increased sales

Reference no: EM132555148

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