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According to a Study Examining Restructuring's Effects on Profitability and Stock

question 14

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According to a study examining restructuring's effects on profitability and stock returns of 500 representative companies listed on the NYSE,in terms of profitability,which of the following categories of companies generated lower returns on assets in the year prior to the announcement of layoffs,the year when layoffs occurred,and in the two subsequent years on a relative basis?


Definitions:

Sustainable Growth Rate

The maximum growth rate a firm can achieve without having to finance growth with additional equity or debt.

Quebec Firm

Refers to a business organization that is registered or operates in Quebec, Canada, subject to provincial laws and regulations.

Equity Value

The value of a company’s shares; it represents the residual value to shareholders after debts and liabilities have been settled.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without having to increase financial leverage or equity financing.

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