Which of the Following Most Likely Indicates That a Company

question 44

Multiple Choice

Which of the following most likely indicates that a company is making good use of financial leverage?

• A)The price-earnings ratio exceeds that of competitors.
• B)Earnings per share is higher than the dividends paid per share.
• C)Net income is higher than cash from operations.
• D)Return on common stockholders' equity is higher than the return on total assets.

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operating expenses.

Land Improvements

Enhancements made to a plot of land to increase its value or usability, such as landscaping, fencing, and paving.

Intangible Assets

Non-physical assets held by a company that can produce economic benefits, such as patents, trademarks, copyrights, and goodwill.

Copyrights

Legal rights granted to an author, artist, or creator for the protection of their original works, preventing unauthorized reproduction.