The Net Income of a Business Is $29,000

question 46

Multiple Choice

The net income of a business is $29,000. The beginning and ending capital balances were $34,000 and $55,000, respectively. No capital contributions were made by the owner during the year. Calculate the amount of owner's withdrawals.

• A)$18,000
• B)$8,000
• C)$5,000
• D)$60,000

Calculate and interpret inventory turnover ratio to assess a firm's inventory management efficiency.

Determine a firm's cash flow performance and its implications for the firm's liquidity.

Understand the components and calculation of operating return on assets (ROA).

Interpret the implications of price-to-earnings (P/E) ratio and its calculation.

---

Definitions:

Aggregate Earnings Multiplier

A valuation metric that compares the total market value of all companies in a sector to their aggregate earnings, often used to gauge sector valuation.

Constant Growth DDM

Dividend Discount Model assuming dividends grow at a constant rate indefinitely, used to estimate the value of a company's stock.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often receiving dividends before common shareholders and having priority in case of liquidation.

Forecasting

The process of making predictions based on past and present data trends, commonly used in finance to estimate future market movements or economic conditions.