Roxy,Inc,Grants 1,000 NQSO to an Employee,Carol,entitling Her to Purchase Roxy

question 14

Essay

Roxy,Inc.,grants 1,000 NQSO to an employee,Carol,entitling her to purchase Roxy stock at $10 per share (the current price of the stock).Roxy simultaneously grants 1,000 ISOs to another employee,Donna,entitling her to buy 1,000 shares of Roxy at $10 per share over a two-year period.One year later,2012,the stock has risen to $20 per share,and Carol and Donna both exercise their options in full,receiving stock not subject to an SRF.

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Definitions:

Cash Flows

The collective sum of cash flowing in and out of a company, which influences its liquidity.

Investing Sections

Refers to the part of the cash flow statement that shows the flow of cash related to investments in assets, securities, and other non-operational activities.

Financing Sections

Parts of financial statements or reports that detail funding activities like equity, debt issuance, and repayment of debt, providing insights into how a company finances its operations.

Cash Inflows

The total amount of money being transferred into a business, often from operations, investments, and financing activities.