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One method of decreasing the cash outflows of a firm is to: A) decrease depreciation B) increase capital expenditures C) decrease dividends D) increase debt repayment

Business Dec 10, 2020

One method of decreasing the cash outflows of a firm is to:

A) decrease depreciation

B) increase capital expenditures

C) decrease dividends

D) increase debt repayment

Expert Solution

The correct answer to the given question is option C) decrease dividends.

The cash outflows of a firm can be reduced by using following measures:

1) Decreasing the dividends to be paid to the shareholders

2) Decreasing capital expenditures

3) Decreasing debt repayment

The depreciation expense is a non-cash item and therefore it does not affect the cash flows.

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