Which of the Following Statements Is True of the Agency

question 25

Multiple Choice

Which of the following statements is true of the agency problem facing the modern public corporation?

• A)It arises when a corporation hires a private agency to conduct audits of its business practices.
• B)It arises when a government agency is assigned with the task of identifying corrupt practices by a corporation.
• C)It arises as a consequence of the separation of ownership and control in the corporation.
• D)It arises as a consequence of the managers of the corporation focusing on enhancing shareholder value.

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Definitions:

Raw Materials Inventory

The total cost of all the components that will be used in the production of goods but have not yet been used.

Days' Sales

A financial metric measuring the number of days it takes for a company to convert its inventory into sales.

Raw Materials Used

The basic substances in their natural, modified, or semi-processed state used as inputs for production.

Average Inventory

The mean value of inventory within a certain period, calculated by adding the beginning inventory and ending inventory and dividing by two.