In Order to Avoid Long-Term Dilution, a Corporation Should Determine

question 37

Multiple Choice

In order to avoid long-term dilution, a corporation should determine whether the necessary additional earnings from the issue are realistic relative to their historic

• A) profit margin.
• B) times interest earned.
• C) total asset turnover.
• D) return on assets.

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Definitions:

Price Elastic

A term describing how responsive the demand for a good is to a change in its price.

Total Revenue

The total amount of money generated by a business from the sale of its goods or services before any costs or expenses are deducted.

Total Revenue

The total amount of money received by a company for goods sold or services provided during a certain period of time.

Price Inelastic

A characteristic of a good for which the demand does not significantly change with a change in its price.