If a Non-Dividend-Paying Firm Bases Its Growth Assumptions on the Sustainable

question 68

Multiple Choice

If a non-dividend-paying firm bases its growth assumptions on the sustainable rate of growth and shows positive net income,then the pro forma statement must reflect

• A)an increase in fixed assets irrespective of the firm's current operating capacity.
• B)an increase in both sales and the debt-equity ratio.
• C)both an increase in the total asset turnover and in the equity multiplier.
• D)a constant debt-equity ratio and an increase in retained earnings.
• E)increases in fixed assets,the debt-equity ratio,and the number of shares outstanding.

Demonstrate knowledge of Porter’s competitive forces model and its importance in strategic planning.

Understand the role and impact of technology in enhancing customer experiences and operational efficiency in industries.

Recognize strategies businesses can employ to gain competitive advantage, including cost leadership, differentiation, and innovation.

Explain the concept of switching costs and their effect on buyer behavior and competitive strategy.

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Definitions:

Account Form

The form of balance sheet that resembles the basic format of the accounting equation, with assets on the left side and Liabilities and Owner’s Equity sections on the right side.

Merchandising Business

A type of business that purchases goods and resells them to consumers without changing their form, primarily making profit through the retail or wholesale of products.

Service Business

A business that provides intangible products or services to customers rather than physical goods.

Closing Entries

The entries that transfer the balances of the revenue, expense, and drawing accounts to the owner’s capital account.