All of the Following Components Are Needed to Calculate the Internal

question 95

Multiple Choice

All of the following components are needed to calculate the internal growth rate except:

• A) return on assets
• B) retention rate
• C) return on equity
• D) earnings on assets

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Definitions:

Goodwill

An intangible asset that represents the excess of purchase price over the fair value of identifiable net assets of an acquired business.

Acquisition Differential

The disparity between what was paid to acquire a company and the net worth of its clearly identified assets adjusted for their fair market value.

Consolidated Balance Sheet

A statement of the combined assets, liabilities, and shareholders' equity of a parent company and its subsidiaries.

Equity Method

A method of accounting for an investment, in which the investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the investee.