Err Company Has a Major Lawsuit Against Them for Unsafe

question 48

Multiple Choice

Err Company has a major lawsuit against them for unsafe products. It recognizes a huge liability in 2004 of $300M. The effect of this liability is to decrease stockholders' equity by 50%. In 2005, the effect of recognizing this liability, all else equal, is:

• A) Return on net operating assets will increase dramatically
• B) Return on net operating assets will decrease dramatically
• C) Return on equity will increase dramatically
• D) Return on equity will decrease dramatically

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Definitions:

Discharge Diagnosis

The final determination of the patient's condition made by medical professionals at the time of discharge from a medical facility.

Suspected Diagnosis

An initial judgment on a patient's condition based on the symptoms presented, awaiting confirmation through further tests.

Principal Diagnosis

The main medical condition diagnosed at the time of discharge from the hospital or end of a clinical encounter that primarily accounted for the patient's need for treatment or care.

Other Specified

Additional information that the physician specified and isn’t included in any other code description.