Stockholders Are Residual Claimants,meaning That They

question 65

Multiple Choice

Stockholders are residual claimants,meaning that they

• A)have the first priority claim on all of a company's assets.
• B)are liable for all of a company's debts.
• C)will never share in a company's profits.
• D)receive the remaining cash flow after all other claims are paid.

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Definitions:

Asset Turnover

Asset turnover is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within a year or within the operating cycle of a business, like cash, inventory, and receivables.

Total Assets

The sum of all resources owned by an entity, including both current and non-current assets, which can be used to generate value or meet obligations.

Net Income

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