An S Shareholder's Stock Basis Includes a Ratable Share of Any

question 59

True/False

An S shareholder's stock basis includes a ratable share of any S corporation liabilities.

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Definitions:

Capital Structure

The manner in which a firm’s assets are financed; that is, the right side of the balance sheet. Capital structure is normally expressed as the percentage of each type of capital used by the firm such as debt, preferred stock, and common equity.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity.

Debt-to-Total-Assets Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by its total assets, showing what portion of the assets is financed by debt.

Net Income

The remaining earnings of a business following the deduction of all expenses and tax liabilities from its total revenue.