reinvested earnings. 30. Some investors prefer dividends to retained earnings (and the capital gains retained earnings bring), while things held constant, it makes sense for a company to others prefer retained earnings to dividends. Other t establish its dividend policy and stick to it, and then it will attract a clientele of investors who like that policy E 31. Net operating working capital, defined as current assets minus the difference between current liabilities and notes payable, is equal to the current ratio minus the quick ratio. 32. An increase in any current asset must be accompanied by an equal increase in some current liability The concept of permanent current assets reflects the fact that some components of current assets do not shrink to zero even when a business is at its seasonal or cyclical low. Thus, permanent current assets represent a minimum level of current assets that must be financed. 33. 34. Although short-term interest rates have historically averaged less than long term rates, the heavy use of short-term debt is considered to be an aggressive current asset financing strategy because of the inhere of using short-term financing