Chapter 4 Quiz-6

Which statement below is false?

A.
The benefits of paying dividends to investors must be balanced against the benefits of internally
retaining funds, and there is no set formula on how to balance this trade-off.
B.
Dividends are sometimes paid out even when the firm has incurred a negative annual net
income.
C.
In 2014dash-2016, companies are aggressively boosting their dividends paid to shareholders.
D.
Dividends are sometimes paid out even if the funds could be better reinvested in the business,
and/or even if the firm has to obtain outside sources of capital to pay for the dividends.
E.
All the statements are true.

E.
All the statements are true.

A limitation of financial ratio analysis includes the following statement:

A.
Financial ratios are not very "actionable" in terms of revealing potential strategies needed
(because they generally are based on performance of the overall firm).
B.
Seasonal factors can influence comparative financial ratios.
C.
Departures from industry average financial ratios do not always indicate that a firm is doing
especially well or badly.
D.
Financial ratios are based on accounting data, and firms differ in their treatment of such items
as depreciation, inventory valuation, R&D expenditures, pension plan costs, mergers, and taxes.
E.
All the statements are limitations.

E.
All the statements are limitations.

In performing breakeven analysis, which of the following are considered variable costs?
A.
Advertising expenses
B.
Labor expenses
C.
Raw material expenses
D.
A and B
E.
B and C

E.
B and C