Each of the Following Statements Is Correct Except That Earnings

question 189

Multiple Choice

Each of the following statements is correct except that earnings per share is reported

• A) below net income.
• B) for both common and preferred stock.
• C) on the face of the income statement.
• D) based on the weighted-average number of common shares outstanding.

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Definitions:

Accounts Payable Period

The average number of days it takes for a business to pay off its creditors and suppliers.

Receivables Turnover

A financial metric indicating how quickly a company collects payments from its customers, calculated as sales divided by accounts receivable.

Cash Cycle

The period between the outlay of cash for purchases and the collection of cash from customers in a business.

Inventory Turnover

A ratio showing how many times a company has sold and replaced inventory over a period.