Which of the Following Events Would Be the Strongest Evidence

question 48

Multiple Choice

Which of the following events would be the strongest evidence that a firm's efforts to improve quality control were achieving their desired result?

• A)A survey of customers indicates a significant increase in the level of customer satisfaction.
• B)The quality control department indicates that the number of defective parts has dropped significantly.
• C)Costs per unit of output decline by more than 10 percent.
• D)Total output increases by 20 percent without an increase in labour or materials.

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Definitions:

Bad News Earnings

Reports of lower than expected earnings, often leading to a negative reaction in the stock market and a decrease in company’s share price.

Negative Earnings Surprise

An event where a company's reported earnings are below the expectations of analysts, often leading to a decline in its stock price.

Stock Returns

The income generated from the investment in shares, comprised of dividends received and capital gains or losses.

Exit Price Approach

A valuation method that determines the price a seller would receive to sell an asset or transferred liability.