Which of the following statements is incorrect about working capital policy? Select the correct response: O Credit policy has an impact on working capital since it has the potential to influence sales levels and the speed with which cash is collected. Managing working capital levels is important to the financial staff since it influences financing decisions and overall profitability of the firm. Holding minimal levels of inventory can reduce inventory carrying costs and cannot lead to any adverse effects on profitability. O A company may hold a relatively large amount of cash if it anticipates uncertain sales levels in the coming year. O The cash budget is useful in determining future financing needs.

Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. Tax rate The inflation rate The firm's capital budgeting decision rules The impact of a firm's cost of capital on managerial decisions Consider the following case: Acme Manufacturing Corporation has two divisions, L and H. Division L is the company's low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company's high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division L is considering a project with an expected return of 9.5%. Should Acme Manufacturing Corporation accept or reject the project? O Reject the project O Accept the project On what…

To compete successfully for the better stockholders and better lenders, a business would need: Good employees Increasing sales revenue A higher asset utilization A lower asset utilization

Assuming that the fiscal health of the Health Company is not optimal, explain how Return on Equity (ROE) can help justify paying dividends to shareholders and increasing the company's debts. If Liver Corporation has a lower price/earnings (P/E) ratio than another firm engaged in the same business, what reasons might explain these differences? Describe at least three problems encountered in the analysis of financial indicators. Explain how the DuPont equation can help in analyzing company results.