Each of the Following Must Be Disclosed in the Financial

question 90

Multiple Choice

Each of the following must be disclosed in the financial statements, except:

• A) The total amounts of long-term debt maturing in each of the next five years.
• B) The company's debt ratio and interest coverage ratio for the current year.
• C) Loss contingencies, when a reasonable possibility exists that a material loss has been incurred.
• D) The fair value of long-term liabilities, when this value is significantly different from the amount shown in the balance sheet.

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Definitions:

Risk-adjusted Equity Cost

A method of determining the cost of equity capital that incorporates the risk associated with the equity investment.

Price Earnings Ratio

A valuation metric that compares a company's share price to its per-share earnings, used to evaluate if a stock is over or under-valued.

Risk-adjusted Cost

A financial measure that adjusts the costs of an investment by considering the risk involved, accounting for the riskier nature of some investments compared to others.

Common Stock

A form of corporate equity ownership, a type of security representing units of ownership or equity in a corporation.