Oakland Corporation Reported a Net Operating Loss of $500,000 in Year

question 2

Multiple Choice

Oakland Corporation reported a net operating loss of $500,000 in year 1 and elected to carry the loss forward to year 2. Not included in the computation was a disallowed meals and entertainment expense of $20,000, tax exempt income of $10,000, and deferred gain on an installment sale of $250,000. The corporation's current earnings and profits for year 1 would be:

• A) $(500,000)
• B) $(720,000)
• C) $(510,000)
• D) $(260,000)

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Definitions:

Excess Cash

The amount of cash holdings that exceed the normal operational needs of a company.

Reverse Split

A corporate action which consolidates the number of existing shares of stock into fewer, proportionately more valuable, shares.

Shares Outstanding

Shares outstanding refers to the total number of shares of a company's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Long-Term Payout Ratio

The proportion of earnings paid out as dividends to shareholders over an extended period, often used as a measure of a company's dividend policy stability.