A Question Asked by Stockholders Is,"How Much Profit Did the Company

question 202

Multiple Choice

A question asked by stockholders is,"How much profit did the company make?" What should the stockholder examine to get the most information that will help evaluate the answer to this question?

• A)The balance sheet,because retained earnings represents current profits
• B)The statement of cash flows,as cash inflows and outflows represents current profits
• C)The income statement,since it shows the revenues and expenses for the period
• D)The economic resources of the company

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Definitions:

Current Profitability

A measure of how much profit a company is generating at the current time, often used to assess financial health.

Constrained Resource

A factor or resource in production that limits the output or performance of a process.

Profitability Order

A method of organizing projects or investments based on their profitability or expected return.

Current Profitability

Current profitability is a measure of a company's financial performance in the present, indicating the degree to which its revenues exceed its operational costs.