If a Firm Manager Has a Base Salary of $100,000

question 109

Multiple Choice

If a firm manager has a base salary of $100,000 and also receive 5% of all profits, what percentage of his/her final income will be from the profit sharing plan given profit equals $1,500,000?

• A)51%.
• B)27%.
• C)43%.
• D)48%.

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Definitions:

Indirect Bankruptcy Costs

Expenses related to bankruptcy that are not direct costs such as legal and administrative fees, including damage to corporate reputation and loss of business opportunities.

Corporate Default

A failure of a company to fulfill its financial obligations, such as missing a debt payment.

Lost Sales

Revenue that a company could have earned but didn't, due to stockouts, inadequate capacity, or other factors.

Debt/Equity Ratio

An indicator of how the financing of company assets is divided between shareholder equity and debt.