A firm that is growing more slowly than its sustainable growth rate ma

A firm that is growing more slowly than its sustainable growth rate may generates excess cash. If the firm chooses to keep the excess cash which of the following is NOT true?

A) Holding on to excess cash may signal OVER utilization of assets.
B) Holding on to excess cash often is a negative stock signal in that investors interpret the excess cash is a result of no attractive investment alternatives.
C) Holding on to excess cash may attract unwanted potential investors who are attracted to the excess cash for their own purposes.
D) Holding on to excess cash may signal UNDER utilization of assets.

ANSWER

D