Which of the Following Participants in the Working of a Firm

question 138

Multiple Choice

Which of the following participants in the working of a firm are referred to as residual claimants?

• A) Workers
• B) Managers
• C) Entrepreneurs
• D) All of the above

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Definitions:

Net Income

The net income of a business following the deduction of all costs and taxes from its overall revenue.

Residual Dividend Policy

A method where dividends are based on earnings minus capital expenditures and working capital needs; basically, dividends are paid from leftover or residual earnings.

Target Capital Structure

The mix of debt, preferred stock, and common equity with which the firm plans to finance its investments. Companies often target a specific structure to optimize their cost of capital.

Capital Requirements

The amount of capital a bank or financial institution must hold to meet regulatory requirements and cover potential losses.