Which of the Following Statements Is FALSE

question 36

Multiple Choice

Which of the following statements is FALSE?

• A)When the foreign tax rate is less than the U.S.tax rate,deferral can provide significant benefits.
• B)The U.S.tax liability is not incurred until the profits are brought back home if the foreign operation is set up as a foreign branch rather than as a separately incorporated subsidiary.
• C)If a company chooses not to repatriate £12.5 million in pre-tax earnings,for example,it effectively reinvests those earnings abroad and defers its U.S.tax liability.
• D)When the foreign tax rates exceed the U.S.tax rates,there are no benefits to deferral because in such a case there is no additional U.S.tax liability.

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Definitions:

Profit Margin

A financial ratio indicating the percentage of revenue that remains as profit after all expenses are deducted.

Investment Turnover

A measure of a company's efficiency in using its assets to generate sales or revenue; calculated by dividing sales over a period by the average investment.

Profit Margin

A financial metric that measures the amount of net income earned with each dollar of sales by comparing net income and net sales.

Investment Turnover

A measure of a company's efficiency in using its assets to generate sales or revenue; the ratio of the cost of goods sold to the average inventory.