Fundamentals of Business Intelligence (FBI) Practice Exam

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Prepare for the Fundamentals of Business Intelligence Exam. Use flashcards and multiple choice questions with hints and explanations to enhance your study. Gear up for success!

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If a company has 50 million in assets and 15 million in liabilities, what is the shareholder's equity?

35 million
15 million
50 million
65 million

The correct answer is: 35 million

To determine the shareholder's equity, one can use the accounting equation, which states that assets equal liabilities plus shareholder's equity. This can be rearranged to calculate shareholder's equity as: Shareholder's Equity = Total Assets - Total Liabilities In this case, the company has 50 million in assets and 15 million in liabilities. Plugging these values into the equation provides: Shareholder's Equity = 50 million (assets) - 15 million (liabilities) = 35 million. This result confirms that shareholder's equity amounts to 35 million, reflecting the residual interest in the company's assets after deducting liabilities. This understanding is pivotal for recognizing the financial health and value available to shareholders, often crucial for investment decisions and assessing overall company performance.