Question
You are an activist investor looking to put pressure on companies that have accumulated too much cash to return cash to stockholders. Which of the
You are an activist investor looking to put pressure on companies that have accumulated too much cash to return cash to stockholders. Which of the following companies would you put the least pressure on to return cash? (You can assume that they all have a cost of capital of 10% and an optimal debt ratio of 40%)
Group of answer choices
mpany B: ROC =25%, Actual debt ratio = 60%
Company F: ROC = 5%, Actual debt ratio = 10%
Company C: ROC = 25%, Actual debt ratio = 10%
Company A: ROC = 25%, Actual debt ratio = 40%
Company E: ROC =5%, Actual debt ratio = 60%
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