If a Firm's Common Size Income Statement Shows That the Earnings

question 104

Multiple Choice

If a firm's common size income statement shows that the earnings after tax percentage is too low, the firm may have spent too much money:

• A)on total assets as a percentage of long-term liabilities.
• B)on expenses as a percentage of current assets.
• C)on cost of goods sold as a percentage of sales.
• D)on taxes paid as a percentage of stockholders' equity.

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Definitions:

Prime Vacant Land

Land in a highly coveted location that is undeveloped and offers great potential for investment, construction, or development due to its desirable characteristics.

Enforceable Contract

A legal agreement between parties that is valid under the law and therefore can be upheld in a court of law.

Legal Consideration

Legal consideration involves something of value that is exchanged between parties in a contract, making the agreement legally enforceable.

Lease Option

A contract that permits a party to lease real property while holding an option to purchase that property.