What Is the Result If the Amount of Net Income

question 170

Multiple Choice

What is the result if the amount of net income for the year is less than the amount of the Dividends?

• A)Retained Earnings increases
• B)Cash balance decreases
• C)Cash balance increases
• D)Retained Earnings decreases

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Definitions:

Liquidity Ratio

Financial metrics that measure a company's ability to meet its short-term obligations using its most liquid assets.

Profitability Ratio

A class of financial metrics that are used to assess a business's ability to generate earnings relative to its revenue, assets, equity, or other financial metrics.

Solvency Ratio

Financial metrics used to evaluate a company's ability to meet its long-term debt and other obligation by comparing its assets to its liabilities.

Profit Margin

A financial metric that measures the amount of net earnings a company makes as a proportion of its sales.