The board of directors is interested in investing in a new technology. Appropriating existing retained earnings is a choice for funding the new technology. You are a consultant to the board. How would you explain this option to the board members so that they could make an educated decision? a. Corporate cash flows must be sufficient to fund this investment b. This sends a message as to the importance to the corporation about the new technology, as it is defining the direction of the corporation, C. This reduces funds available for future dividends. d. All of the above answers are correct. You have some funds that you would like to invest. You have done some internet research to find two publicly traded companies in the same industry and you have compared their earnings per share figures. Why might the earnings per share reported by each company differ? a. One company might be much more profitable than the other. b. One company might have preferred shares outstanding on which dividends were paid; the other might have issued only common shares. c. One company might have many more outstanding shares than the other, or have issued or repurchased common shares during the year. d. All of the above answers are correct. You are a consultant for several emerging, high-growth technology firms that were started locally and have been a part of a business Incubator in your area. These terms start out as sole proprietorships but quickly realize the need for more capital and often incorporate. One of the common questions you are asked is about stockholder's equity. Explain the characteristics and functions of the retained earnings account and how the account is different from contributed capital. a. Contributed capital has been provided directly by the owners; retained earnings has been generated through operations. b. Contributed capital can be returned to owners by way of dividends; retained earnings are permanent, c. Profits increase retained earnings while losses decrease contributed capital. d. Contributed capital represents the par or stated values of issued and outstanding shares; any additional amounts contributed by owners are included in retained earnings. Which of the following statements is correct regarding the importance of the EPs calculation to financial analysts who follow.companies on the stock exchanges? a EPS reflects the portion of a company's earnings that can be attributed to each outstanding common share. b. An upward or downward trend in EPS has an inverse effect on a company's stock price. CEPS is another name for the price-to-earnings ratio, which is a key indicator of a stock's actual value. d. Earnings per common share and earnings per preferred share are both important to analysts