SOLVED

11) The EPS (Earnings Per Share) for Disco Documents Ltd. this year is $0.75. If the company has $1,575,000 capital invested and earned net income for the year of $412,500, how many common shares does the Company have outstanding? A) 550,000 B) 38,181 C) 2,100,000 D) 309,375 E) 1,181,250 12) Prendle-Robinson Inc., has capital invested of $1,200,000 on 50,000 common shares outstanding. If the Company’s net income for the year was $144,000, the company’s EPS, Earnings Per Share, rounded to two decimal places is A) $.12 B) $.35 C) $2.88 D) $8.33 E) $24 13) For a company wishing to pursue a strategy of increasing shareholder wealth as opposed to profit maximization, which of the following would be the most appropriate action? A) Increase short-term return over sustained growth B) Reduce spending on research and development C) Distribute all after-tax net income as dividends D) Offer only established products for sale E) Close a retail location in a declining market 14) A group that is a stakeholder in a business is A) Any group having an interest in that business B) Any group having a financial interest in that business C) Comprised of only its common shareholders and lenders D) Comprised of only its common shareholders and managers E) Any group external to a business with a financial interest in it 15) When a business seeks to provide each stakeholder group with a satisfactory return, it is said to be achieving a business objective of A) Profit distribution B) Good corporate citizenship C) Satisficing D) Stakeholder cooperation E) Economic egalitarianism 16) If maximizing shareholder wealth is a prime objective for the McDonald’s hamburger chain, donating $500,000 to build an opera house in Winnipeg would be most consistent with the goal if it A) Contributed to betterment of the arts community in the city B) Provided income tax relief equal to 25% of the contribution C) Provided shareholders with the opportunity to enjoy fine living arts D) Increased visitors to the community who may spend money at McDonald’s E) Enhanced the corporate image of McDonald’s with leading citizens 17) Satisfying the needs of shareholders, instead of other stakeholders, must be paramount to a business because A) This objective is always consistent with those of other stakeholders B) Government will put pressure on a business to do so C) Other stakeholders do not have an impact on the success of the business D) Shareholders will always ensure that the needs of other stakeholders will be met E) If the management team does not pursue this goal, they will be replaced 18) A mission statement reflects a company’s A) Short-term objectives B) Ultimate purpose C) Fundamental strategies D) Operational tactics E) Promises to customers 19) A mission statement often includes A) Commitment to shareholders B) Target values for return on investment C) Plans for new product/service offerings D) Names of corporate directors E) Declaration of future earnings 20) Pressure to increase returns to shareholders has A) Grown in response to fewer global investment opportunities B) Grown due to the relative ease of moving funds to any opportunity in the world C) Not changed in the past decade D) Decreased because of the stability of the North American economy E) Decreased in response to availability of better information through technology