Assume that the president of Ice Mountain Water Co. made the following statement

Question

Assume that the president of Ice Mountain Water Co. made the following statement in the Annual Report to Shareholders:

"The founding family and majority shareholders of the company do not believe in using debt to finance future growth. The founding family learned from hard experience during the Great Depression that debt can cause loss of flexibility and eventual loss of corporate control. The company will not place itself at such risk. As such, all future growth will be financed either by stock sales to the public or by internally generated resources."



As a public shareholder of this company, using the solvency measures discussed in Chapter 17, how would you respond to this policy?

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