Yellow Card Company Compared Its Actual Sales Results with a Static

question 71

Multiple Choice

Yellow Card Company compared its actual sales results with a static budget.Which of the following situations might result?

• A)Favourable differences that are not justified
• B)Unfavourable differences that are not justified
• C)Either favourable or unfavourable differences that are not justified
• D)Actual differences that are justified

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Definitions:

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if a stock is over or under-valued.

Earnings Per Share

The amount of earnings a company makes, divided by its outstanding common shares, which reveals the firm's level of profitability.

Return on Assets

A financial ratio indicating the profitability of a company relative to its total assets, measuring how effectively a company uses its assets to generate earnings.

Debt-Equity Ratio

The indicator that quantifies how much of a company's assets are financed through equity and how much through debt.