What Is the Problem of Writing Off Goodwill in Service

question 44

Multiple Choice

What is the problem of writing off goodwill in service companies

• A) leverage will become low
• B) the price earnings ratio will not change
• C) the stated financial position will not change
• D) equity maybe become depleted

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Definitions:

Financial Intermediary

Institutions that act as middlemen between savers and borrowers, including banks, investment funds, pension funds, and insurance companies.

Government's Expenditures

The total amount spent by a government on goods, services, and public projects within a specific period.

Market for Loanable Funds

A theoretical financial market where borrowers and lenders interact, with the loan interest rate being determined by supply and demand for funds.

Capital Investment

The purchase of goods or services by a firm to add to its fixed assets to increase its capacity or efficiency in producing goods or services.