Which Form of Business Structure Faces the Greatest Agency Problems

question 23

Multiple Choice

Which form of business structure faces the greatest agency problems?

• A)Sole proprietorship
• B)General partnership
• C)Limited partnership
• D)Limited liability company
• E)Corporation

---

Definitions:

Net Operating Income

A measure of a company's profitability from its regular business operations, deducting operating expenses from gross income.

Operating Leverage

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

Net Operating Income

The profit a company generates from its operations, before taxes and interest, from its primary business activities.

Sales Decline

A decrease in the volume or value of sales over a specific period.