Which of the Following Is False Regarding Corporations

question 12

Multiple Choice

Which of the following is false regarding corporations?

• A) Corporations are legal entities.
• B) Corporations exist separately from their shareholders.
• C) Corporations can sue or be sued by others.
• D) Courts consider corporations to be "legal persons."
• E) Corporations cannot claim rights under the U.S. Constitution.

Recognize the relevance of earnings numbers in estimating sustainable long-term cash flows.

Learn the differences in valuation approaches and their respective implications for investors and analysts.

Acknowledge the relationship between cost of capital, earnings, and company valuation.

Understand the role of fundamental valuation in assessing the timing, amount, and uncertainty of future cash flows.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer.

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of the business.

Common-size Comparative Statements

Financial reports that display line items as percentages of a common base figure to facilitate year-over-year or company-to-company comparisons.