On a Profit-Volume Graph, the Intersection of the Profit Line

question 35

Multiple Choice

On a profit-volume graph, the intersection of the profit line with the vertical axis provides a

• A)profit of £1,000.
• B)profit equal to zero.
• C)profit equal to fixed costs.
• D)loss equal to fixed costs.

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Definitions:

Retained Earnings

Earnings accumulated by a company thus far, after subtracting any dividends or distributions made to shareholders.

Price-earnings Ratio

A valuation metric for companies, representing the ratio of a company's share price to its per-share earnings.

Earnings per Share

A financial ratio indicating the proportion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.

Stock Dividend

A form of dividend payment made by a company to its shareholders in the form of additional shares, rather than cash.