A Major Problem with ESOPs Is That

question 98

Multiple Choice

A major problem with ESOPs is that

• A) they carry a significant risk for employees.
• B) employees are not allowed to participate in votes by shareholders.
• C) the stocks within the trust are too widely diversified to earn high returns.
• D) any earnings from the trust holdings are taxed at an extremely high rate.
• E) they result in reduced profitability for the employees.

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Definitions:

Common Sized Statements

Financial statements that present all items in percentage terms, with balance sheet items shown as a percentage of total assets and income statement items as a percentage of total revenue.

Cash Flows

The aggregated financial movements into and out of a venture, significantly affecting its availability of liquid assets.

Ratio Analysis

A quantitative analysis of information contained in a company's financial statements, used to evaluate the performance, liquidity, and solvency of the business.

Financial Position

A snapshot of a company’s financial condition at a specific moment in time, encompassing assets, liabilities, and equity.