Regarding the use of funds generated within the firm:
A) Reinvesting cash generated from operations is usually more expensive than borrowing money.
B) A company with a product that has significant growth potential should invest the earnings from that product to salvage declining products.
C) Indirect distribution usually requires more investment capital for a producer than does direct distribution.
D) When finances are tight, companies should look for strategy alternatives that help get a better return on money already invested.
E) All of the above.

Question

Quizplus · Accepted Answer

Option D suggests that when a firm's finances are tight, they should consider alternative strategies that help them achieve better returns on the money they have already invested. This approach is more practical than reinvesting cash generated from operations, which can be expensive, especially when borrowing is more cost-effective. Furthermore, investing earnings from a product with significant growth potential to salvage declining products, as stated in option B, may not always be the best approach since firms need to consider several factors when reinvesting their earnings. Lastly, option C seems irrelevant to the question since it suggests that indirect distribution requires more investment capital than direct distribution, which is not related to the use of funds generated by the firm.

Regarding the Use of Funds Generated Within the Firm