Which of the Following Is an Informal External Control

question 32

Multiple Choice

Which of the following is an informal external control?

• A) the voice within us that tells us what is right and wrong
• B) ridicule from family members
• C) prison sentences
• D) court-mandated therapy

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Definitions:

Bankruptcy Risk

The risk that a company will be unable to meet its financial obligations and thus may have to declare bankruptcy.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in revenue, indicating the level of fixed versus variable costs.

Financial Leverage

The use of borrowed money to increase the potential return of an investment, which also increases the risk of loss.

EPS

Earnings Per Share, a measure of a company's profitability calculated by dividing its net earnings by the number of outstanding shares.