Question
What do you think of the following statements? (TIPS: a few sentence for each should be enough; be as clear and specific as possible; sometimes
What do you think of the following statements? (TIPS: a few sentence for each should be enough; be as clear and specific as possible; sometimes a good counterexample could be helpful)
A. "Since depreciation is often a big positive number on the statement of cash flows, it must be an important source of cash for many firms."
B. "Since the higher the cash ratio, the greater the likelihood the firm will be able to pay its bills as they come due, a well run firm will try to hold as much cash as possible."
C. "The IRR rule is preferred because it usually leads to the maximization of firm value and provides an easy to summarize measure of a project's quality." D. "Most projects involve an initial working capital investment that is offset by an equal cash inflow at the end of the project, so working capital doesn't really matter when evaluating investment projects." E. "Since both shareholders and debtholders care about the value of the firm, they usually agree on the firm's strategic direction."
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