Company X Has 2 Million Shares of Common Stock Outstanding

question 74

Multiple Choice

Company X has 2 million shares of common stock outstanding with a book value of $2 per share.The stock trades for $3 per share.It also has $2 million in face value of debt that trades at 90% of face value.What is the debt ratio that should be used to calculate WACC?

• A) 13.91%
• B) 23.08%
• C) 31.03%
• D) 27.67%

Grasp the procedures for correcting errors in previously issued financial statements.

Understand the fundamentals of earnings per share (EPS) calculation and its implications for financial analysis.

Understand the effects of expenses and dividends on stockholders' equity.

Grasp the concept and reporting of prior period adjustments in financial statements.

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Definitions:

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A marketing approach where sales representatives initiate calls to potential customers to sell products or services.

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A communication device that allows two or more users to conduct a conversation when they are too far apart to be heard directly.

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Direct, face-to-face interactions between a company representative and a current or potential customer, often used for sales or customer service.