Which of the Statements Below Is TRUE

question 68

Multiple Choice

Which of the statements below is TRUE?

• A)The profits for common stock owners come after payment to the employees,suppliers,government,and creditors.
• B)Shareholders elect the board of directors,which ultimately selects the bondholder team that runs the day-to-day operations of the company.
• C)Stock is a minor financing source for public companies.
• D)Stockholders are paid before debt holders (bondholders)if a company fails.

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Definitions:

Net Profit Margin Percentage

A financial ratio that shows the percentage of net income derived from total revenue, emphasizing the profitability of a company after all expenses have been deducted.

Financing Activities

These activities generate cash inflows and outflows related to borrowing from and repaying principal to creditors and completing transactions with the company’s owners, such as selling or repurchasing shares of common stock and paying dividends.

Cash Inflow

Cash inflow is the movement of money into a business from various sources, including sales, investment income, and financing activities.

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.