Chapter 29: Problem 31

Which one of the following is the most accurate statement? (LO6) a) In 2008 more of the Fortune 500 earned a profit than lost money. b) About the same number of the Fortune 500 lost money in 2008 as in \(2004 .\) c) The total losses among the Fortune 500 in 2008 were twice as great as the losses in \(2007 .\) d) Only a handful of large corporations made a profit in 2008 .

Short Answer

Expert verified

Based on the historical context of the 2008 financial crisis and our analysis of each statement, the most accurate statement is c) "The total losses among the Fortune 500 in 2008 were twice as great as the losses in 2007." This statement aligns with the economic situation at the time, with companies experiencing increased losses during the crisis. However, it's essential to note that without actual financial data, we cannot definitively confirm or deny the accuracy of any statement.

Step by step solution

Understanding historical context of 2008 economy

To answer this exercise, we must remember the financial crisis of 2007-2008. In this period, many companies faced significant losses as the global financial system was destabilized. However, not all companies were impacted to the same extent, and some businesses were able to thrive or at least maintain profitability.

Analyze statement a)

Statement a) says that in 2008, more Fortune 500 companies earned a profit than lost money. To verify this statement, we would need the financial data of the Fortune 500 companies during this period. However, considering the overall outlook of the economy during this time, it's possible that more of the companies earned a profit than lost money, even if some businesses faced challenges.

Analyze statement b)

Statement b) compares the number of Fortune 500 companies that lost money in 2008 with those that lost money in 2004. Since the financial crisis took place between these years, there might have been an increase in the number of companies that experienced losses. However, we cannot say for certain if the numbers were about the same without analyzing the financial data.

Analyze statement c)

Statement c) states that the total losses among the Fortune 500 in 2008 were twice as great as the losses in 2007. This statement seems to resonate with the economic situation at the time. The financial crisis took place between these years, and it's highly likely that companies experienced increased losses during this period.

Analyze statement d)

Statement d) claims that only a handful of large corporations made a profit in 2008. While the economic downturn might have affected a considerable number of large corporations, it's far-fetched to say that only a few of them made a profit. Large corporations often have several strategies and risk management practices in place, which may have helped them remain profitable during the crisis.

Determine the most accurate statement

Based on our analysis, statement c) appears to be the most accurate of the options provided. The financial crisis had a significant impact on the world economy, and it's logical that there were increased losses among Fortune 500 companies during this period. However, without actual financial data, we cannot definitively prove or deny the accuracy of any statement.