On June 10,Year 1,Burton Builders,Inc

question 79

Multiple Choice

On June 10,Year 1,Burton Builders,Inc. ,a publicly traded company,announced that it had been awarded a contract to build a football stadium at a contract price of $500 million.This contract would increase its projected revenues by 20% over the next three years.Which of the following statements is correct with regard to this announcement?

• A)The market price of Burton's stock will probably be higher on June 11,Year 1 than on June 10th.
• B)Burton's net cash flow from operations will increase by 20% over the next three years.
• C)Burton's assets should be increased by $500 million on June 10,Year 1 to recognize this contract.
• D)Burton's net income will increase by 20% over the next three years.

---

Definitions:

Profitability

Measures how much profit a company generates in relation to its revenues, assets, or equity, indicating its financial health and efficiency.

Debt

The total amount of money owed by an individual, company, or other entity to lenders, which can include loans, bonds, mortgages, and other forms of financial liabilities.

Liquidity

Liquidity refers to how easily an asset or security can be converted into cash without affecting its market price.