Blog

If forecasting over-predicts the level of an asset, the firm will over-plan its financial needs.​

If a firm does not pay cash dividends, it may reinvest the earnings and grow.​

The bottom line of a cash budget shows the firm’s excess cash or need for external finance.​

If forecasting over-predicts the level of an asset, the firm will over-plan its financial needs.​

Regression analysis may be used to estimate the slope of the line relating sales and accounts receivable.​

Analyzing an investment from a stand-alone perspective avoids considering portfolio effects.​

Low correlation among cash inflows is associated with lower net present values.​

Analyzing an investment from a stand-alone perspective avoids considering portfolio effects.​

Risk adjustments favor the use of net present value over the internal rate of return.​

In order to maximize the value of the firm, the financial manager must determine the firm’s optimal capital structure.