Healy, Inc

question 129

Multiple Choice

Healy, Inc., reports an effective tax rate in its income tax footnote of 14%. The only reconciling item with regard to the hypothetical tax at 35% is a valuation allowance reversal of negative 21%. Which of the following statements is true concerning comparing Healy, Inc.'s effective tax rate with its competitors, all of whom have an effective tax rate between 32 and 36%?

• A)Healy Inc., is managing its tax burden in a more efficient manner than its competitors.
• B)Healy Inc., structural effective tax rate is actually quite close to its competitors.
• C)Healy Inc., earned more cash profits because of its lower effective tax rate.
• D)Healy Inc., is likely to be engaged in tax shelter activities.

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Definitions:

Competitive Parity

A strategy where a company ensures its share of marketing spend is comparable to its competitors.

Generic Brands

Products that are not branded with a company name but instead are labeled with the name of the commodity and tend to be less expensive.

Pay Raise

A pay raise refers to an increase in an employee's salary or wages, typically awarded as a recognition of performance, inflation adjustments, or changes in job responsibilities.

Name-Brand Goods

Products that are manufactured and marketed under a registered trademark or brand name, recognized by consumers for their quality and advertising.