The CFO of Google believes that its greatest strategic goal is to maintain flexibility.To achieve this goal,which of the following financial structures is in place at Google?
A)Google has issued significantly more long-term debt than equity (common shares) because debt has a significantly lower after-tax cost.
B)Google has issued significantly more equity (common shares) to avoid the restrictions that debt would imposed through restrictive covenants.
C)Google holds large amounts of cash and short-term investments in spite of the opportunity loss resulting from low investment earnings.
D)Google maintains a dividend payout ratio in line with other firms in the industry to ensure that its common shares are attractive to investors.

Question

Quizplus · Accepted Answer

By holding large amounts of cash and short-term investments, Google maintains flexibility by having the ability to quickly invest in new projects or acquire new companies without having to rely on external financing. This also allows Google to weather any unexpected economic downturns or industry disruptions without having to make drastic changes to its operations or lay off employees.

The CFO of Google Believes That Its Greatest Strategic Goal