If a Firm Has a 4 Million Shares Outstanding and Its

question 5

True/False

If a firm has a 4 million shares outstanding and its stock trades at $50 per share, the company has a market capitalization of $200,000,000.

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Definitions:

Fixed Administrative Expense

Expenses that do not change with the level of production or sales over a certain period, related to the administration of a business.

Contribution Format

An income statement format that separates fixed and variable costs to show the contribution margin.

Contribution Format

A type of income statement that separates variable costs from fixed costs, highlighting the contribution margin.

Direct Manufacturing Cost

Costs that are directly attributable to the production of goods, such as labor and materials.