Financial Edge Trick Question
How would you define best...
like best for me, best for the most people, its a bit fuzzy.
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I think the question is flawed. Think of C, addressing the debt - we don't have the cost of debt, so its hard to say where best to put the profits.
Is it b?
Do you know how "profit" is defined? Do you know what an "operating expense" is?
Answer is definitely bonuses
'B' - reinvested or paid out to shareholders. Too lazy to write out how increasing cash in A (while technically true) is what can satisfy B, C or D. And B and D can actually satisfy each other at the same time if employees are shareholders. Need more information about C because that's already at least partially baked into expenses, etc etc.
But more importantly: B is the textbook answer and is the one that your professor/instructor wants you to parrot back at them for credit. If college taught me anything, it's how to give them what they want to hear in order to get passing credit whether they're actually right or wrong or there's additional information needed to give a complete answer.
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