Managers can increase the value of a firm by making decisions that
A) increase the future cash flows of the firm.
B) increase the amount of time required to generate future cash flows.
C) increase the riskiness of future cash flows.
D) decrease the liquidity of the firm's securities.

Question

Quizplus · Accepted Answer

By making decisions that increase the future cash flows of the firm, managers are increasing the overall value of the firm. This is because a higher cash flow means more money available for the company to invest in growth opportunities or return to shareholders.

B, C, and D are not correct because solutions that increase the amount of time required to generate future cash flows, increase the riskiness of future cash flows, or decrease the liquidity of the firm's securities would not generally increase the overall value of the firm.

Managers Can Increase the Value of a Firm by Making