A 'Public' Company

question 73

Multiple Choice

A 'public' company

• A) must have its shares traded on a stock exchange.
• B) is essentially the same as a 'private' company.
• C) must appoint an auditor.
• D) is never a 'reporting entity.'

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Definitions:

EBIT

A gauge of company profits, Earnings Before Interest and Taxes, leaves out the charges for interest and taxes to show raw earnings.

Sales

The transactions involved in selling goods or services in the normal course of business, generating revenue for the company.

DOL

Degree of Operating Leverage; a measure of a company's fixed costs as a percentage of its total costs, indicating how earnings before interest and taxes (EBIT) change in response to a change in sales volume.

Contribution Margin

The amount of revenue remaining after deducting variable costs, used to cover fixed costs and generate profit.