Answer: C. The decline in the P/E ratio more than offset earnings growth and this pushed the market cap down.
Explanation:
Market Cap = P/E ratio * Earnings
Market cap is dependent on both the P/E ratio and Earnings as shown by the formula and as shown on the graph, the P/E ratio kept on decreasing which means that for the Market Cap to decrease, the downward pull of the P/E ratio must have overshadowed the growth in earnings such that the Market Cap went down instead of up.
For instance, if the earnings were $40 billion and the P/E ratio was 15, Market Cap would be $600 billion.
If earnings increased to $45 billion but P/E ratio decreased to 10, Market Cap would become $450 billion.
Answer:
1. GAAP is the term used to indicate the whole body of FASB authoritative literature. <u>TRUE</u>.
The Financial Accounting Standards Board are the authors of the GAAP and as such GAAP is used to indicate the whole body of their literature.
2. Any company claiming compliance with GAAP must comply with most standards and interpretations but does not have to follow the disclosure requirements. <u>FALSE. </u>
To claim compliance with GAAP, all standards and interpretations including Disclosure requirements should be followed.
3. The primary governmental body that has influence over the FASB is the SEC. <u>TRUE.</u>
The Securities and Exchange Commission (SEC) is the Government body that is meant to oversee the application of Accounting standards and as such, they have influence over the FASB.
4. The FASB has a government mandate and therefore does not have to follow due process in issuing a standard.<u> FALSE. </u>
Even though they have a Government mandate, the FASB must follow due process when establishing principles so that people might be able to contribute to or criticize the guidelines should they please.
Answer:
$50 billion
Explanation:
To find the change in aggregate expenditures, we need to find the change in consumption. For this, we will use the marginal propensity to consume formula:
MPC = ΔC/ΔY
Where:
MPC = Marginal propensity to consume
ΔC = Change in consumption
ΔY = Change in output (GDP)
We know that out MPC is 0.5, and our ΔY is $billion. We plug these amounts into the formula:
0.5 = ΔC / 100 billion
And we rearrange the equation to solve for ΔC
ΔC = $ 100 billion x 0.5
ΔC = $50 billion
So the change in consumption is $50 billion, which is also the change in aggregate expenditure.
Answer:
$135000
Explanation:
Cole should record the patent at $135000. The intangible asset is recorded at the price at which it was purchased. Net carrying value of $160000 in the books of seller is not useful.
At the time of purchase of intangible asset, the fair value of stone stock exchanged was $45.
So the patent cost is =
3000 shares × $45 per share = $135000.
Cole should record the patent at this value.
Increase the quantity demanded by about 25 percent.
<h3>What is the short definition of price elasticity?</h3>
- Price elasticity in business and economics refers to how much people, consumers, or producers alter their demand or the quantity supplied in reaction to changes in price or income.
- It is mostly used to evaluate how consumer demand has changed as a result of a price change for a good or service.
<h3>What are some examples of price elasticity of demand?</h3>
- When a price increase results in a greater percentage reduction in demand, we say a good is price elastic.
- For instance, if price increases 20% and demand declines 50%, the PED equals -2.5. One illustration is Heinz soup. Heinz soup options are plenty today.
learn more about price elasticity of demand here
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