Which of the Following Is True About Choosing a Limited

question 65

Multiple Choice

Which of the following is true about choosing a limited liability company form of ownership?

• A)It has no disadvantages except its newness.
• B)It is ideal for a new company but difficult to convert to with an existing company.
• C)It is inexpensive,easy to form,and covered by little regulation due to its newness.
• D)It's an excellent conversion vehicle for existing businesses that are suffering from double taxation but problematic for sole proprietorships.

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Definitions:

Sustainable Growth Rate

The maximum rate at which a company can grow its earnings without needing to increase its financial leverage or equity financing.

Dividend Payout Ratio

The proportion of earnings that a company pays to its shareholders in the form of dividends.

Debt Ratio

A financial ratio that measures the extent of a company’s leverage, calculated by dividing total liabilities by total assets.

Mission Statement

A brief declaration that outlines an organization's purpose, objectives, and approach to reach its goals, guiding its strategic planning and decision making.