The Prime Rate Has Been Tied to Market Interest Rates

question 74

True/False

The prime rate has been tied to market interest rates to better relate the interest rate to banks' cost of funds.

Comprehend the relationship between sales, inventory, and the financial ratios.

Understand the significance of non-cash transactions and their reflection in financial statements.

Apply ratio analysis to evaluate firm's leverage and its effects on financial performance.

Understand the use of ratio analysis in comparing firm's performance over time and against competitors.

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Definitions:

Schedule M-1

A tax form used by corporations to reconcile income reported on the company's financial statements with the income reported on the tax return.

Book Income

The income or profit reported by a company in its financial statements before adjustments for taxes, as per accounting rules, different from taxable income.

Taxable Income

The amount of an individual’s or corporation's income used to determine how much tax is owed, calculated as gross income minus deductions and exemptions.

Fiscal Year-End

The fiscal year-end is the conclusion of a 12-month or 52-week period over which a company or organization measures its financial performance.