Fact Pattern 20-1Daily Bread Bakeries, Inc

question 29

Multiple Choice

Fact Pattern 20-1Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements for bread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years. After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract.
-Refer to Fact Pattern 20-1.Enriched can 

• A) ​assign its rights under the contract but cannot terminate it. 
• B) ​terminate the contract and seek damages. 
• C) ​suspend performance under the contract until Enriched is fully paid. 
• D) ​do nothing.

---

Definitions:

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in dividends, representing how much money a company returns to shareholders versus retaining for growth.

Net Income

The total profit of a company after all expenses, taxes, and costs have been deducted from total revenue.

External Financing Needed

The additional funds a company requires from external sources to finance its planned activities or growth when internal cash flows are insufficient.

Profit Margin

A measure of profitability calculated as net income divided by revenues, expressed as a percentage.