Author Question: You're anxious to start investing in the stock market. You decide to buy stocks in companies that ... (Read 72 times)

karen · **on:** Jul 14, 2018

You're anxious to start investing in the stock market. You decide to buy stocks in companies that you are personally interested in. You need to choose between your favorite shoe company, SweetFeet, and your favorite sport drink company, SportsAde. Upon looking at the balance sheet for each company, you see that SportsAde's assets total 3.5 million, and their liabilities equal 500,000. SweetFeet's assets are only 2 million, and their liabilities equal 1.8 million. However, you know from your business classes that you should also look at the income statements for each company. Upon looking at the income statements for both companies, you find that SportsAde's revenues are less than their expenses, and the company has a loss of 2 million. SweetFeet's revenues are 2.9 million, and their expenses are only 1.2 million, giving them a profit of 1.7 million.

Which of the following is true?
A) Comparing both the income statements and the balance sheets shows that SportsAde is the better choice to invest money in.
B) Based on the income statements, SportsAde is in a better financial position, and you should purchase their stock.
C) Based on the balance sheets, SweetFeet is in a better financial position, and you should purchase their stock.
D) It is necessary to compare both the income statement and the balance sheet to get an accurate picture of the financial health of each company.
E) You cannot get an accurate picture of the financial health of either company without also looking at the statement of cash flows.

Question 2

Because customer preferences must be considered, _____ should play an important role in product line decisions.
A) marketing managers
B) production managers
C) human resources managers
D) financial managers
E) first-line supervisors