Which of the Following Statements Is Correct

question 19

Multiple Choice

Which of the following statements is correct?

• A)Par value shares are prohibited under the CBCA.
• B)Contributed Capital represents the proceeds from a share issue in jurisdictions where par values are allowed.
• C)Legal capital is that which would be distributed back to shareholders in the event of liquidation.
• D)Contributed Capital is the amount on which dividend payments should be based.

Grasp the concept of net and gross investment and their role in GDP calculations.

Understand the importance of setting synergistic goals in a professional environment.

Recognize the positive impact of employee engagement on organizational prosperity.

Identify characteristics of effective and realistic goals.

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Definitions:

Degree Of Total Leverage

A measure that quantifies the sensitivity of a company's earnings before interest and taxes to a change in its sales.

Financial Leverage

The use of borrowed capital or debt to increase the potential return of an investment.

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, indicating the extent to which a company can increase its profits by increasing sales.

Modigliani-Miller Model

A foundational financial theory proposing that the market value of a company is determined by its earning power and risk of its underlying assets, and is independent of the way it chooses to finance its investments or distribute dividends.