Indicate whether each of the following items is true or false._____ a) Many successful corporations do not pay dividends to their stockholders._____ b) Careful study of the financial statements will give investors the ability to predict future movements in the market price of a corporation's stock._____ c) The chief executive officer (CEO) of a corporation is usually not also a member of the board of directors._____ d) Dismissing an incompetent manager can be complicated when a company is experiencing entrenched management. _____ e) The number of shares to purchase in order to attain "significant influence" of a corporation can readily be determined from the financial statements.
What will be an ideal response?
a) This is true. Many corporations retain earnings for future growth rather than pay dividends to stockholders.
b) This is false. While it is useful to study a company's financial statements, they do not necessarily predict future movements in a stock's market price.
c) This is false. The chief executive officer (CEO) is usually a member of the board of directors.
d) This is true. The chief executive officer (CEO) is usually a member of the board of directors and is frequently influential in choosing other board members. The CEO is also in a position to reward loyal board members. As a result, board members may be reluctant to fire the CEO or other top executives even if the individuals are performing poorly. Corporations operating under such conditions are said to be experiencing entrenched management.
e) This is false. The financial statements indicate the number of issued shares, but they do not indicate how widely held the shares are.
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On January 1, 20X8, Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash. At that date, Stamp reported common stock outstanding of $200,000 and retained earnings of $100,000, and the fair value of the noncontrolling interest was $70,000. The book values and fair values of Stamp's assets and liabilities were equal, except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life. Stamp reported the following data for 20X8 and 20X9: Stamp CorporationYearNet IncomeComprehensiveIncomeDividendsPaid20X8$25,000 $30,000 $5,000 20X9 35,000 45,000 10,000 Package reported net income of $100,000 and paid dividends of $30,000 for both the years.Based on the preceding information, what
is the amount of consolidated comprehensive income reported for 20X9? A. $128,750 B. $138,750 C. $135,000 D. $145,000
Though very important, properly defining the problem is not the most important step in the marketing
research process. Indicate whether the statement is true or false
Which of the following is a distribution system that uses different channels and communication methods to reach and serve a target market?
A) a vertical marketing system B) a horizontal marketing system C) a hybrid marketing system D) a logistics system E) an intensive distribution system
Consolidated financial statements provide more helpful information than does the equity method, because
a. they include all the assets, liabilities, revenues, and expenses of the controlled subsidiaries, not just the investment account that represents the parent's investment in the subsidiary's common shareholders' equity and not just the parent's share of the subsidiary's net income. b. the parent, because of its voting interest, can control the use of all of the subsidiary's assets. c. the parent needs to own only a majority of the voting stock, not necessarily 100%, to control the use of 100% of the subsidiary's assets. d. consolidation of the individual assets, liabilities, revenues, and expenses of both the parent and the subsidiary provides a more realistic picture of the operations and financial position of the single economic entity. e. all of the above