When Conducting a Worst Case Scenario Analysis, You Should Assume

question 63

Multiple Choice

When conducting a worst case scenario analysis, you should assume that:

• A) The sales quantity is at the upper end of your expectations.
• B) The highest sales price obtainable in the marketplace can be charged.
• C) No competition exists in the marketplace.
• D) Your variable costs per unit are at the high end of the spectrum of possible prices.
• E) Your fixed costs are constant and at the low end of your cost range.

Understand the effects of stock dividends on market price, equity, and the number of shares outstanding.

Grasp the accounting treatment and rationale behind stock splits.

Comprehend the capitalization of retained earnings for both small and large stock dividends.

Understand the various types of preferred stock and their features regarding dividends.

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