Professional Documents
Culture Documents
3. What are the earnings per share (EPS) for a company that earned $100,000 last
year in after-tax profits, has 200,000 common shares outstanding and $1.2 million
in retained earning at the year end?
$100,000
$6.00
$0.50
$6.50
4. A(n)
would be an
manager; owner
accountant; bondholder
shareholder; bondholder
decisions.
financing and investment
investment, financing, and asset management
financing and dividend
capital budgeting, cash management, and credit management
10. A company's
corporate governance.
common stock shareholders
board of directors
top executive officers
11. The Sarbanes-Oxley Act of 2002 (SOX) was largely a response to:
a series of corporate scandals involving Enron, WorldCom, Global
Crossing, Tyco and numerous others.
a dramatic rise in the US trade deficit.
charges of excessive compensation to top corporate executives.
rising complaints by investors and security analysts over the financial
accounting for stock options.
The following item is NEW to the 13th edition.
4. Deciding on the total amount of assets needed by the firm is a key step in the
investment decision.
t
6. In a large corporation, the firm's owners are usually also its top managers.
f
7. Corporate management, acting as the owners' agent, makes all decisions in the
owners' best interests.
f
8. Maximizing the price of a share of the firm's common stock is the equivalent of
maximizing the wealth of the firm's present owners.
t
10. The price of a share of common stock acts as a barometer indicating how
well management is doing on behalf of shareholders.
t
11. The stakeholders of a corporation are all constituencies with a stake in the
fortunes of the company. They include shareholders, creditors, customers,
employees, suppliers, and local communities.
t
12. In the US, the Public Company Accounting Oversight Board (PCAOB)
appoints the chairman and the members of the Securities and Exchange
Commission (SEC).
f