Most Companies Structure Their Stock Option Plans to Meet the Requirements

question 33

True/False

Most companies structure their stock option plans to meet the requirements of APB No. 25 and use the intrinsic value approach.

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Definitions:

Acid Test Ratio

Used to determine the amount of assets that can be quickly turned into cash to pay current liabilities; acid test ratio equals total of cash plus receivables divided by total current liabilities.

Balance Sheet

A summary report detailing a company's assets, debts, and equity held by shareholders at a particular moment.

Income Statement

The financial statement that shows the revenues, the expenses, and the net income for a certain period of time.

Net Income to Net Sales

A financial ratio measuring a company's profitability by comparing net income to net sales.