The Most Common Approach to Motivating Executives to Make Decisions

question 35

Multiple Choice

The most common approach to motivating executives to make decisions that are in the best interests of stockholders is _____.

• A)high base salaries with few bonuses
• B)average base salaries with significant firm performance bonuses
• C)a long-term incentive plan using stock options
• D)average base salary with performance-based perks

---

Definitions:

Financial Statements

Reports that provide information about a company's financial condition including income, expenses, and net worth.

Current Ratio

A financial ratio that measures a company's ability to pay short-term obligations using its short-term assets.

Current Assets

Assets expected to be converted into cash, sold, or consumed within one year or in the normal operating cycle of the business, whichever is longer.

Current Liabilities

Financial obligations a company is due to pay within one year or within its normal operating cycle if longer.