A Person Owns 10% of a Company That Has Earnings

question 6

Multiple Choice

A person owns 10% of a company that has earnings of $50,000; pays dividends of $30,000; and has investments of $10,000. His cash flow from the company for the present year will be

• A) $3,000.
• B) $4,000.
• C) $2,000.
• D) $5,000.

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Definitions:

Other than Temporary

Refers to impairments or reductions in asset values that are not expected to be recovered in the short term.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest.

Market Value

Market value is the current price at which an asset or service can be bought or sold in a competitive and open market.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation, and entitles the holder to vote on corporate matters and receive dividends.