Preferred stock and bonds are similar because
A. they both have voting power.
B. interest and dividend payments are legal obligations.
C. neither interest nor dividends are tax deductible.
D. both are a source of financial leverage.
Answer: D
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A 20 percent change in net sales will result in a 20 percent change in net income
Indicate whether the statement is true or false
Which of the following is not a factor that indicates a business enterprise that establishes a variable interest entity (VIE) should consolidate such VIE with its own financial statements?
A. The business enterprise establishing a VIE has the obligation to absorb potentially significant losses of the VIE. B. The business enterprise establishing a VIE has power through voting rights to direct the entity's activities that significantly impact economic performance. C. The business enterprise establishing a VIE has the right to receive potentially significant benefits of the VIE. D. The business enterprise establishing a VIE receives risks and rewards of the VIE in proportion to equity ownership. E. The business enterprise establishing a VIE is a primary beneficiary for the VIE.
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.7 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $6 million. The company wants to build its new manufacturing plant on this land; the plant will cost $13.2 million to build, and the site requires $840,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?
The organization of business messages should be organized based on
a. a prediction of the receiver's reaction to the main idea. b. the deductive sequence. c. the inductive sequence. d. a reflection of the writer's mood and personality.