Which of the following is the most appropriate measure to examine whether management of a firm is pursuing the goal of maximizing the firm's stock price?
A)Retained earnings
B)Net income
C)Cash flows
D)Earnings per share
E)Accounting profits

Question

Quizplus · Accepted Answer

Cash flows are the most appropriate measure to examine whether management is pursuing the goal of maximizing the firm's stock price because they directly impact the value of the firm to its shareholders. Cash flows provide a clear picture of the firm's ability to generate cash from its operations, which is crucial for funding investments, paying dividends, and reducing debt, all of which can lead to an increase in stock price.

Which of the Following Is the Most Appropriate Measure to Examine