When the projected liabilities and equity are greater than the assets, the firm can plan to ________.
A) retain extra cash
B) pay dividends
C) retire debt
D) all of the above

Question

Quizplus · Accepted Answer

When projected liabilities and equity are greater than assets, it indicates that the firm may have excess cash or resources beyond what is needed to cover its liabilities and equity positions. In such a scenario, the firm can afford to retain extra cash for future investments or emergencies, pay dividends to shareholders as a return on their investment, or retire debt to reduce interest expenses and improve its balance sheet.

When the Projected Liabilities and Equity Are Greater Than the Assets