Disadvantages of a Company Going Public Include All of the Following

question 54

Multiple Choice

Disadvantages of a company going public include all of the following, EXCEPT that

• A) there are direct costs associated with compliance.
• B) management may have to disclose more of its strategy.
• C) publicly traded stock provides valuable signaling information.
• D) management will spend significant time meeting with analysts.
• E) management must answer to outside shareholders.

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Definitions:

Accounts Receivable

Outstanding payments due to a firm from its customers for delivered goods or services awaiting payment.

Cost of Goods Sold

The total direct costs attributed to producing goods, including materials and labor, which are sold during a certain period.

Total Asset Turnover

A financial ratio that measures a company’s effectiveness in using its assets to generate sales revenue.

Inventory Turnover

A ratio that shows how many times a company's inventory is sold and replaced over a specified period, indicating the efficiency of inventory management.