A Manager States That "We Must Be Creating Wealth

Multiple Choice

A manager states that "We must be creating wealth. To do so we're creating steady growth in earnings." What would you reply?

A) "That only creates wealth if the rate of return on the additional investment is greater than the required rate."
B) "Wealth creation is occurring, but the company would do better if we focused on cash flow."
C) "That's right."
D) "Growth in earnings is only relevant if it occurs without investment."