Answer:
a. Investors shares in Net Income = Net Income * Share percentage
= $110,000 * 35%
= $38,500
Share of unrealized gain = Gross profit * Percentage of remaining inventory * Share percentage
= $36,000 * 15% * 35%
= $1,890
Hence, Equity Income = Investors share in Net income - Investor share in unrealized gain on ending inventory
= $38,500 - $1,890
= $38,610
b. Equity investment balance at year end = Equity Investment in the beginning during the time+ Equity income to be reported - Dividend paid
= $360,000 + $36,610 - $20,000
= $376,000
c. Investor share in Net Income = Net income * Share percentage
= $160,000 * 35%
= $56,000
Share of unrealized gain = Gross profit * Percentage of remaining inventory * Share percentage
= $36,000 * 15% * 35%
= $1,890
Hence, Equity Income = Investor share in Net Income + Investor share in unrealized gain on beginnging inventory
= $56,000 + $1,890
= $57,890
True or false: Contributions of cash and property to a corporation in exchange for shares of the corporations stock can be tax deferred.
Answer:
True
Explanation:
According to the United States of America Code, under section 351, which basically deals with the transfer to a corporation controlled by the transferor, it is TRUE that contributions of cash and property to a corporation in exchange for shares of the corporation stock can be tax-deferred.
Hence, it can be concluded that the correct answer to this question is definitely TRUE.
The gain or loss on the effective portion of a U.S. parent company's hedge of a net investment in a foreign entity should be treated as:
Answer:
other comprehensive income.
Explanation:
Other comprehensive income is a term that describes a form of income that is yet to be gotten or realized, and it can be any or all of the following: revenues, expenses, gains, and losses.
Hence, in this case, the gain or loss on the effective portion of a U.S. parent company's hedge of a net investment in a foreign entity is considered not yet realized. Therefore it should be treated as Other Comprehensive Income.
In the case of dormant cracks wider than about 1m, it is more economical to use ____________
Answer:
B. Grouting
Explanation:
These are the options for the question;
A. Epoxy resin
B. Grouting
C. Tensioning
D. Ranging
In the case of dormant cracks wider than about 1m, it is more economical to use grouting method.
Grouting techniques is a techniques that is achieved by removal of dirt or unwanted substance from the crack of the the faulty part and then grouting of the crack after which the surface is sealed by sealants. It should be noted that grouting is economical than other methods such as surface treatment.
The federal income tax law allows individuals whose property is destroyed by a natural disaster such as a fire or hurricane to reduce their taxable income by the amount of their financial loss. This rule is intended to improve the
Answer: Horizontal Equity of tax
Explanation:
The Horizontal equity of cash is a logic that people of similar assets and income should be paying the same taxes thereby encouraging tax neutrality.
A person whose property is destroyed by a natural disaster such as a fire or hurricane will see their tax paying ability diminished and so should be paying a tax that is reflective of their reduced number of assets and the money they will have to pay to replace it.
Effective communication occurs when: Group of answer choices information is transmitted and understood between two or more people. the sender convinces the receiver to accept the information sent. information is collected from various sources but sent to a limited audience. the sender transmits information that is received by someone other than the intended receiver. information is sent through informal rather than formal channels.
Answer:
information is transmitted and understood between two or more people.
Explanation:
The essence of every communication is to pass an information across. Information can then be said to be successful, if both the receiver and the sender understood each other.
For example, a sender telling someone to pay off his debt before the next 7 days. It would be an effective communication if the reciever of such information clears his or her debt before the allocated time frame.
ABC declared a property dividend. The dividend consisted of 10,000 common shares of its investment in XYZ Company. The shares had originally been purchased at $4 per share and had a $1 par value. The value of the shares on the declaration date is $7 per share. What is the first entry that should be recorded related to this dividend? a. Retained earnings 70,000 Property dividends payable 70,000 b. Retained earnings 70,000 Property dividends payable 40,000 Gain 30,000 c. Investment in XYZ 30,000 Retained earnings; 30,000 d. Investment in XYZ 30,000 Gain 30,000
Answer:
D. Investment in XYZ 30,000 Gain 30,000
Explanation:
The value of shares have increased from $4 to $7. Which means they are now increased by 30,000 (10,000 x $3). The question refers to the increase in value of Shares rather than buying them at new value and therefore, Option A is incorrect.
While the question does mentions declaration of property dividend, it does not mention by how much the same was paid. Hence, the entry of Option B is also incorrect.
When value of Shares are increased then it results in Gain in Shares and effects the Balance Sheet rather than the Income Statement. Therefore, the entry recording Retained Earnings in Option C is incorrect.
Option D is correct, as the Investment in XYZ has increased by 30,000 and simultaneously it has resulted in Gain by 30,000. Hence, this is the first entry that should be recorded.
Journalize the entries to record the following transactions:
1. Mar. 10: 500 units of raw materials were purchased on account at $4.00 per unit.
2. Mar. 15: 250 units of raw materials were requisitioned at $4.50 per unit for production, Job 872.
3. Mar. 25: 215 units of raw materials were requisitioned at $5.00 per unit for production, Job 879.
Answer:
1. Mar. 10: 500 units of raw materials were purchased on account at $4.00 per unit.
March 10, 202x, 500 units of raw materials purchased on account:
Dr raw materials inventory 2,000
Cr Accounts payable 2,000
2. Mar. 15: 250 units of raw materials were requisitioned at $4.50 per unit for production, Job 872.
March 15, 202x, 250 units of raw materials requisitioned for Job 872
Dr Work in Process 1,125
Cr Raw materials inventory 1,125
3. Mar. 25: 215 units of raw materials were requisitioned at $5.00 per unit for production, Job 879.
March 25, 202x, 215 units of raw materials requisitioned for Job 879
Dr Work in Process 1,075
Cr Raw materials inventory 1,075
Sherwin-Williams' Dutch Boy paint has packaging that is getting rave reviews.The new Twist & Pour paint is packaged in an all-plastic gallon container with an easy twist-off lid,comfortable side handle,and even a pouring spout.There's no other paint product like it on the market.This innovative packaging was most likely designed for which of the following functions?a. To facilitate product use and convenienceb. To contain and protect the productc. To reduce environmental damaged. To facilitate recyclinge. To promote the product
Answer:
to facilitate product use and conveinience
Viejol Corporation has collected the following information after its first year of sales. Sales were $1,440,000 on 120,000 units, selling expenses $210,000 (40% variable and 60% fixed), direct materials $504,000, direct labor $169,400, administrative expenses $276,000 (20% variable and 80% fixed), and manufacturing overhead $382,000 (70% variable and 30% fixed. Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year.
(a) Compute (1) the contribution margin for the current year and the projected year, and (2) the fixed costs for the current year. (Assume that fixed costs will remain the same in the projected year.)
(b) Compute the break-even point in units and sales dollars for the current year.
(c) The company has a target net income of $200,000. What is the required sales in dollars for the company to meet its target?
Answer:
a. (1). 25 % and 25 %
a. (2). $461,400
b. 153,800 units
c. $1,845,600
d. $2,645,600
Explanation:
Contribution margin = Contribution / Sales × 100
Where
Contribution margin = Sales - Variable Cost
Current
Sales $1,440,000
Variable Costs :
Selling expenses $84,000
Direct materials $504,000
Direct labor $169,400
Administrative expenses $55,200
Manufacturing Overheads $267,400 ($1,080,000)
Contribution $360,000
Contribution margin = $360,000 / $1,440,000 × 100
= 25 %
Projected
Sales ( $12 × 120,000 × 1.10) $1,584,000
Variable Costs :
Selling expenses ($84,000/120,000 × 132,000) ($92,400)
Direct materials ($504,000/120,000 × 132,000) ($554,400)
Direct labor ($169,400/120,000 × 132,000) ($186,340)
Administrative expenses ($55,200/120,000 × 132,000) ($60,720)
Manufacturing Overheads ($267,400/120,000 × 132,000) ($294,140)
Contribution $396,000
Contribution margin = $396,000 / $1,584,000 × 100
= 25 %
Fixed Costs Calculation :
Selling expenses ($210,000 × 60%) $126,000
Administrative expenses ($276,000 × 80%) $220,800
Manufacturing Overheads ($382,000 × 30%) $114,600
Total Fixed Cost $461,400
Break Even Point (Units) = Fixed Costs ÷ Contribution per unit
= $461,400 ÷ ($360,000 ÷ 120,000)
= 153,800 units
Break Even Point (Dollars) = Fixed Cost ÷ Contribution Margin
= $461,400 ÷ 0.25
= $1,845,600
Sales to Reached Target Profit = (Fixed Cost + Target Profit) ÷ Contribution Margin
= ($461,400 + $200,000) ÷ 0.25
= $2,645,600
The cross-price elasticity of demand for coffee and coffee-cream is likely to be Group of answer choices
Answer:
B) less than zero.
Explanation:
Since the coffee and the coffee cream are consumed and used together so they are considered to be the complement goods to each other
In this case, the cross price elasticity of demand is negative and while on the other hand if the two goods are considered to be a substitute than this would be a positive
Hence, it should be less than zero i.e. negative
Therefore the correct option is B.
which one of Porter's generic strategies is achieved by constructing efficient, large-scale facilities
Answer: Overall Cost Leadership
Explanation:
Porter posited that one way a company can attain a competitive advantage in an industry is by overall cost leadership.
This means that the company needs to be able to produce goods and services in a cheaper and more efficient way than its competitors because then it can sell its products for cheaper prices and capture more market share.
One way of achieving cost leadership is by constructing efficient, large-scale facilities that will enable the company to take advantage of economies of scale and achieve less costs per unit.
After a few years of work in the marketing department of a small firm, you are placed in charge of the firm's inbound marketing. What are you most likely to be in charge of? Group of answer choices
Answer:
Ensure that customers can find the firm when they search for information on products and services.
Explanation:
Inbound marketing involves attracting customers to a business's products and services by improved customer service and building trust.
Various channels that can be used for inbound marketing are social media, content marketing, search engine optimisation, and branding.
Outbound marketing on the other hand involves pushing out of various products an services to customers via various channels.
Steps in inbound marketing are:
Define the customer
Understanding customer purchase cycles
Establish potential customer
Build loyalty
Use customer relationship management (CRM)
Content management
has excess cash of $15,000 at the end of the harvesting season. will need this cash in four months for normal operations. Requirements 1. What are some reasons why may choose to invest in debt or equity securities? 2. What type of classification would 's investment fall withinshort-term or long-term? Why? Requirement 1. What are some reasons why may choose to invest in debt or equity securities?
Answer:
1)
Some of the major reasons why Garden Haven might to choose to either invest in debt or equity securities are as follows;
They want to generate earnings. It is better to earn money from excess cash than keep it idle. They invest in debt or securities because they provide liquidity. Investments in debt or securities can be sold through exchange the day decision is taken to see and convert it cash .To meet cyclical cash needs. They may have policies as regard to quantum of cash that can be kept .
2)
In terms of classification, Garden Haven's investment falls in short term investments.
Investments made for a period less than a year are classified as short term investments. Investments made for longer than one year are classified as long term investments. Since Garden Haven is making this investment for four months, this is be classified as short term investment.
The MNE can ________ its ________ by gaining access to markets that are more liquid and/or less segmen
Answer: decrease; MCC.
Explanation:
The MNE can decrease its MCC by gaining access to markets that are more liquid and/or less segmented than its own.
A multinational enterprise which is also referred to as the multinational corporation, is an enterprise that produces goods or services for more than one country. Examples include Shell, Deloitte, Nestle etc
When multinational firms have access to more liquid markets, it can help reduce their MCC.
Assume that a customer has an established margin account with no special memorandum account, and the account is restricted. With the Regulation T requirement at 50%, the purchase of $10,000 worth of stock would generate a Regulation T call of
Answer: $5000
Explanation:
Given that customer has an established margin account with no special memorandum account, and the account is restricted. With the Regulation T requirement at 50%, the purchase of $10,000 worth of stock would generate a Regulation T call of :
Margin requirement = 50%
Worth of stock = $10,000
The regulation T- call which will be generated is a deposit of the full margin requirement of the purchase.
Since margin requirement = 50% and worth of stock = $10,000
Regulation T-call = 50% of $10,000
0.5 × $10,000 = $5,000
Hence, regulation T- call is $5,000
A company issued 260 shares of $100 par value common stock for $31,000 cash. The total amount of paid-in capital in excess of par is:
Answer:
The total amount of paid-in capital in excess of par is: $5,000.
Explanation:
When Common Stocks are classified as par value Stocks, any price paid in excess of the par value of the Stock is accounted for in the Share Premium account.
Here is the Summary of the Transaction provided.
Common Stocks : 260 shares × $100 = $26,000
Paid-in capital in excess of par : $31,000 - $26,000 = $5,000
Who are angel investors? Give some characteristics and discuss their motivations, etc.
On September 1, 2021, Blue Co., issued $1,600,000 of its 10% bonds at 98 plus accrued interest. The bonds are dated June 1, 2021 and have an effective interest rate of 11%. Interest is payable semiannually on June 1 and December 1. At the time of issuance, Blue would receive cash of:
Answer:
$1,536,768 (look at explanation)
Explanation:
the question is missing the options which would help to determine the clean price using accrued interests and the YTM formula, or it is missing the years to maturity. Since I cannot guess any options (they are infinite), but I can use a 10 year to maturity period to solve it as an example:
in order to determine the clean market price of the bonds we can use the approximate yield to maturity formula (for 1,600 bonds of $1,000):
0.055 = {50 + [(1,000 - MV)/20]} / [(1,000 + MV)/2]
0.055 x [(1,000 + MV)/2] = 50 + [(1,000 - MV)/20]
0.055 x (500 + 0.5MV) = 50 + 50 - 0.05MV
27.5 + 0.0275MV = 100 - 0.05MV
0.0775MV = 72.50
MV = 72.50 / 0.0775 = $935.48
since the bonds yield a higher rate than coupon rate, they were sold at a discount at approximately $935.48 each
accrued interest per bond = $1,000 x 10% x 3/12 = $25
dirty price per bond = $935.48 + $25 = $960.48
total cash received = $960.48 x 1,600 = $1,536,768
Answer:
Blue would receive cash of $1,608,000.
Explanation:
The amount of cash Blue would receive is the addition of the of price of the bonds and interest from June 1, i.e. the bond date, to September 1, i.e. the issue date.
These can be calculated as follows:
Price of the bonds = $1,600,000 * 98% = $1,568,000
Interest = $1,600,000 * 10% * (3 months / 12 months) = $1,600,000 * 10% * 0.25 - $40,000
Amount received by Blue = Price of the bonds * Interest = $1,568,000 + $40,000 = $1,608,000
Therefore, Blue would receive cash of $1,608,000.
Note that the question reads Interest is payable semiannually on June 1 and December 1. This implies that the accrued interest is not payable yet on th September 1 but it will be paid on December. This is why the accrued interest is added to the cash received by Blue in order to hold it till December 1 when it will be paid.
On January 1, 2018, Wallace, Inc. decides to invest in 7,200 shares of Dressage stock when the stock is selling for $ 20 per share. On June 1, 2018, Dressage paid a $ 1.00 per share cash dividend to stockholders. On December 31, 2018, Dressage reports net income of $ 80,000 for 2018. Assume Dressage has 18,000 shares of voting stock outstanding during 2018 and Wallace has significant influence over Dressage.
1. Identify what type of investment the Dressage stock is for Wallace.
2. Journalize the transactions related to Wallace's investment in the Dressage stock during 2018.
3. In what category and at what value would Wallace's report the investment on the December 31, 2018, balance sheet?
REQUIREMENT 1:
Wallace's investment would be ________ investment.
a. a controlling interest
b. a held-to-maturity
c. a no significant influence
d. a significant influence
e. an available-for-sale
REQUIREMENT 2:
1) January 1:Wallace Inc. decides to invest in 7,200 shares of Dressage stock when the stock is selling for $20 per share.
Debit Credit
2) June 1: Dressage paid a $1.00 per share cash dividend to stockholders
Debit Credit
3) December 31: Dressage reports net income of $80,000 for 2018.
Debit Credit
REQUIREMENT 3:
In what category and at what value would Wallace's report the investment on the December 31, 2018 balance sheet?
Wallace would report a ___________ ( long term assets, long term liability, short term asset, short term liability) of $ _____________on the December 31 2018 balance sheet
Answer:
REQUIREMENT 1:
Wallace's investment would be ________ investment.
d. a significant influenceWallace owns 40% of Dressage's stocks.
REQUIREMENT 2:
1) January 1:Wallace Inc. decides to invest in 7,200 shares of Dressage stock when the stock is selling for $20 per share.
Dr Investment in Dressage, Inc. 144,000
Cr Cash 144,000
2) June 1: Dressage paid a $1.00 per share cash dividend to stockholders
Dr Cash 7,200
Cr Investment in Dressage, Inc. 7,200
3) December 31: Dressage reports net income of $80,000 for 2018.
Dr Investment in Dressage, Inc. 32,000
Cr Investment revenue 32,000
REQUIREMENT 3:
In what category and at what value would Wallace's report the investment on the December 31, 2018 balance sheet?
Wallace would report a LONG TERM ASSET of $168,800 on the December 31 2018 balance sheet
Giovanna will be borrowing $150,000 today to open her own business, and she will pay it back with 20 yearly payments starting one year from today. If the effective annual interest rate is 8%, how much will the final payment be if the amount of principal reduced each year is constant
Answer:
$8,100
Explanation:
Following is the table that will we used to compute last payment made:
Op, Principal Principal Repayment Interest Cl. Principal
1 150,000 7,500 12,000 142,500
2 142,500 7,500 11,400 135,000
3 135,000 7,500 10,800 127,500
4 127,500 7,500 10,200 120,000
5 120,000 7,500 9,600 112,500
6 112,500 7,500 9,000 105,000
7 105,000 7,500 8,400 97,500
8 97,500 7,500 7,800 90,000
9 90,000 7,500 7,200 82,500
10 82,500 7,500 6,600 75,000
11 75,000 7,500 6,000 67,500
12 67,500 7,500 5,400 60,000
13 60,000 7,500 4,800 52,500
14 52,500 7,500 4,200 45,000
15 45,000 7,500 3,600 37,500
16 37,500 7,500 3,000 30,000
17 30,000 7,500 2,400 22,500
18 22,500 7,500 1,800 15,000
19 15,000 7,500 1,200 7,500
20 7,500 7,500 600 -
Here
Closing Principal = Opening Principal - Principal Repayment
The last final payment would be:
Final Payment = Last Principal Repayment Amount + Last Interest Payment
Now the values from the above table are given as under:
Last Principal Repayment Amount is $7,500
Last Interest Payment is $600
By putting values in the above equation, we have:
Final Payment = $7,500 + $600 = $8,100
financial statements are reports on the financial performance of organizations. they provide data on
Answer:
Financial statements are reports on the financial performance of organizations. They provide data on
a. The organization's profitability and goal achievement
b. Changes in the Cash flows and positions, according to activities
c. Financial position in terms of assets, liabilities, and stockholders' equity
Explanation:
The financial statements that provide the above data are the Income Statement, the Statement of Cash Flows, and the Balance Sheet. They are the main financial statements required by GAAP and investors who want to analyze the organization. In the case of governmental and non-profit making organizations, their income statement is known as a Statement of Revenue, Expenses, and Changes in Net Assets.
What does good marketing planning require?
A. Collecting and analyzing data
B. Understanding business systems
C. Making a profit
D. Information through advertising
Answer:
understanding business systems. is the anwers
Option B.
but all of these require for good marketing............. ᐛ
Managers have a multiplier effect in organizations which means that
Answer:
Explanation:
Managers having multiplier effects in organizations means that the influence of the managers on the organization is multiplied for far past the results of just one person.
Just like the meaning of the word multiplier, to increase by a factor. To multiply. Managers have influence over more than one person. Which is why they're called managers in the first place. The ability to have influence over more than one person in an organization is termed the multiplier effect
What is the correlation coefficient of the relationship between the average weekly hours spent studying and the score on the final exam?
0.5049 is the Multiple R value. Remember that for single variable linear regression, Multiple R, which is the square root of R2, is equal to the absolute value of the correlation coefficient. The regression coefficient for Average Weekly Hours Studying (0.03, as shown in the bottom table of the output) is positive, so the slope is of the regression line is positive. Therefore, the correlation coefficient must also be positive.
Answer:
hello some parts of the question is missing attached below is the missing part
answer : Multiple R = 0.5049 (correlation coefficient )
Explanation:
The correlation coefficient of the relationship between the average weekly hours spent studying and the score on the final exam can be determined/calculated via the relationship between the average weekly hours spent studying and the score of the final exam.
To find the correlation coefficient we will find the square root of R squared
[tex]\sqrt{R - SQUARED } = \sqrt{0.2549} =[/tex] 05049
Which of the following would be most likely to hedge using foreign currency options?
A. Public Utility
B. Public Sewage company
C. Tool and Die company
D. Railroad company
Answer:
C
Explanation:
Which of the following is the BEST description of the law of demand?
A. The quantity demanded increases as the price decreases.
OB. The quantity demanded increases as the price increases.
C. Demand is unrelated to fluctuations in supply.
OD. Supply decreases as the demand increases.
O E. The quantity demanded decreases as the price decreases.
The difference between a traditional format income statement and a contribution format income statement is:_______.
a. that the traditional format organizes costs into cost of goods sold and selling and administrative expenses, while the contribution format organizes costs into variable and fixed costs.
b. that the traditional format organizes costs for internal use only, while the contribution format organizes costs for stockholders and creditors.
c. that the traditional format calculates gross margin which is equal to cost of goods sold minus fixed costs, while the contribution format calculates contribution margin which is cost of goods sold minus variable costs.
d. that the traditional format organizes costs by cost behavior, while the contribution format organizes costs by function.
Answer:
(a) that the traditional format organised cost into cost of goods sold and selling and administrative expenses while contribution format organizes cost into variables and fixed cost
The difference between a traditional format income statement and a contribution format income statement is that the traditional format organizes costs into cost of goods sold and selling and administrative expenses, while the contribution format organizes costs into variable and fixed costs. Thus, the correct option is A.
What are the different formats of income statements?
The income statement reports on the revenues, expenses, and profits of an organization. The two main types of income statements are a traditional format income statement and a contribution format income statement.
A traditional format income statement is a report in which a company's net income is calculated using both the production costs and the amount of units which are sold by the company.
A contribution format income statement is a special kind of income statement format which segregates the variable and fixed expenses involved in running a business. It shows all the revenues which are generated after deducting all the variables and fixed expenses separately from the business.
Therefore, the correct option is A.
Learn more about Format income here:
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he following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir Company Sales $485,000 $485,000 Variable costs 291,000 242,500 Contribution margin 194,000 242,500 Fixed costs 186,240 234,740 Net income $7,760 $7,760 (a1) Calculate Contribution margin ratio. (Round answers to 2 decimal places, e.g. 0.32.) Contribution Margin Ratio Blanc Company Noir Company
Answer:
contribution margin ratio= 0.45
Explanation:
Giving the following information:
Blanc Company Noir Company
Company Sales $485,000 $485,000
Variable costs 291,000 242,500
To calculate the contribution margin ratio, first, we need to determine the sales proportion:
Blanc= 485,000/970,000= 0.5
Noir= 485,000/970,000= 0.5
Now, we need to use the following formula:
contribution margin ratio= Weighted average contribution margin/ Weighted average sales
Weighted average contribution margin= (weighted average sales - weighted average variable cost)
Weighted average contribution margin= (0.5*485,000 + 0.5*485,000) - (0.5*291,000 + 0.5*242,500)
Weighted average contribution margin= 218,250
contribution margin ratio= 218,250 / 485,000
contribution margin ratio= 0.45
During October, Kreitner Inc. transferred $73,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $76,000. The journal entries to record these transactions would include a:
Pleaze you Omitted options which i thin should be
credit to work in process of $73,000
debit to finished goods of 76,000
credit to finished goods of $73,000
credit to cost of goods sold of $76,000
Answer: credit to work in process of $73,000
Explanation:
Journal to record transfer of$73,000 from Work in Process to Finished Goods
Account title Debit Credit
Finished goods $73,000
Work in Process $73,000
Journal to record cost of goods sold from finished goods
Account title Debit Credit
Cost of goods sold $76,000.
Finished goods $76,000
_____ tend to outperform during an economic slowdown. a. Consumer durable goods b. Consumer staples c. Cyclical companies
Answer:
Option C, Cyclical companies, is the right answer.
Explanation:
Option C, “Cyclical companies” is the correct answer because the cyclical companies are sensitive to the business situation or cycle. During the economic prosperity, the revenue of these type of firms is expansionary and higher. While in the situation of economic slow down the performance of these companies goes on decreasing or outperform and its operation starts contracting in the adverse economic situation. Therefore. The option “Cyclical companies” is the right answer.