Please Refer to the Following Data: Which of the Following

question 5

Multiple Choice

Please refer to the following data: Which of the following is a valid conclusion from the above data?

• A) The company shifted toward greater debt financing and less equity financing over the 2-year period.
• B) The company relied heavily on retained earnings to finance asset growth in 2014.
• C) Current asset and current liability data suggest a liquidity problem in 2014.
• D) The balance in Retained earnings declined over a 2-year period.

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Definitions:

Preferred Stock

A class of ownership in a corporation with a fixed dividend that is paid out before any dividends to common stockholders.

Common Equity

The amount of money that would be returned to shareholders if all the company's assets were liquidated and all its debts repaid.

Year 0 Value

Year 0 Value is a reference point in financial analysis indicating the value of an investment or project at the beginning period before any growth or decline.

Weighted Average

Weighted average is a calculation that takes into account the varying degrees of importance of the numbers in a data set.