An investor is more likely to buy a firm's stock if the firm's income statement shows ________ and if its balance sheet shows ________.

Question

Quizplus · Accepted Answer

Investors are likely to buy a firm's stock if the firm is profitable and has a strong financial position, which is indicated by a large net worth on the balance sheet. A large after-tax profit is a key component of the income statement that shows profitability. Therefore, the correct answer is B, which includes both a large after-tax profit and a large net worth on the balance sheet. Choices A, C, and D are incorrect because they do not accurately represent the key indicators that investors look for when deciding whether or not to purchase a firm's stock.

An Investor Is More Likely to Buy a Firm's Stock