The higher the debt level, the greater the burden borne by ___________ and the cost of debt.

Q: What does Total debt include?

A: Answer: Generally, debt is an obligation imposed upon a corporation to manage its business. Total…

Q: , which of the following tends to have the LEAST debt

A: A firm’s capital structure is a mix of debt and equity. The cost of procuring such debt and equity…

Q: Give an example of a debt ratio?

A: Companies’ capital structure may contain debt and equity. It is not necessary for any company to…

Q: what happens to the cost of debt if the pourcentage of debt gets lower in the capital structure

A: Cost of debt is the return that is expected by all debt holders. They get their return in the form…

Q: Define the term After-tax cost of debt?

A: Cost of capital is the overall cost of financing the funds from all sources of finance. The cost of…

Q: Critically discuss over-investment and under-investment problems due to debt usage. What kinds of…

A: Capital structure means the amount of debt and equity which the firm has as its capital. The company…

Q: Explain an example how to calculate debt ratio.

A: Debt Ratio: Debt ratio is the percentage of assets of the company that are procured or financed…

Q: Outline the advantages and disadvantages of using short term debt, as opposed to longterm debt, in…

A: Deducting of current liabilities from the current assets, will be termed as working capital.…

Q: What is the Relationship between the Incremental Cost and the Loan-to-Value Ratio?

A: The question is based on the concept loan to value ratio and its relationship with incremental cost.

Q: Credit risk is defined as the inability of _________to meet their debt obligations. For _______the…

A: risk management is a task that requires a huge amount of skill and development. for risk management,…

Q: Why is there a positive leverage from use of debt? How can we tell that?

A: Positive leverage: Leverage is the concept of investment by using the borrowed funds. Positive…

Q: What is the Effect of Loan-to-Value Ratio on Loan Cost?

A: LTV ratio tells about the maximum loan approved in terms of the value of the collateral given.

Q: Explain an example of debt investment.

A: Debt Investment Debt Investment is refer as when the company raises the money by selling the debt…

Q: How does the difference between the book value of the debt and the reacquisition price represents…

A: Definition: Early extinguishment debt: When the debt obligations are retired before its scheduled…

Q: Define bad debt expense.

A: Definition:   Expenses: Expenses are costs incurred for the operations of a business. The costs…

Q: What is credit enhancement, and what effect does it have on debt costs?

A: Credit enhancement represents the strategy that improves the business' credit risk profile. It helps…

Q: Explain the Structuring the Payment for a Target Debt Coverage Ratio?

A: Coverage Ratios are the ratios that depict that on an average how a firm would be able to cover its…

Q: Define the concepts of Dept capacity and Unused debt capacity? and if unused debt capacity was…

A: Debt Capacity: In general terms, it is the amount of debt that a business can incur and repay it as…

Q: When is debt to asset ratio important when raising money

A: Debt to asset ratio is one of the important ratios that we use in finance. This is essentially a…

Q: Calculate the debt ratio

A: Debt ratio is a financial ratio which is calculated by dividing the total liabilities by the total…

Q: debt

A: Cost of debt can be defined as the rate of interest which a company incurs on its debts. The cost of…

Q: a. WACC b. Aftertax cost of debt

A: Given :  Capital Structure  Weights  Cost (%) Common Stock  65% 10% Preferred stock  10% 4%…

Q: what is the meaning of debt-to-asset ratio?

A: Debt is the amount of liability which arises from past or present event for which a business is…

Q: difference between debt and quity

A: A company’s capital consists of two forms, one is equity and the other is debt. When a company is…

Q: Why do we use an after-tax figure for cost of debt but not for cost of equity?

A: Cost of debt is the interest payments a company needs to make for debt financing, whereas cost of…

Q: explain the derecognition of debt;

A: Derecognition of debt As bonds are issued, then an entity may leave a bond that is outstanding till…

Q: Explains the effect of debt on profit margin and return on assets (ROA).

A: Profit margin is net income as a percentage of sales and Return on assets is Net income as a…

Q: The borrowing cost to be capitalized in general borrowing cost is the lower between the amount…

A: General borrowing cost refers to the borrowing cost like interest expense, finance charges on the…

Q: What is the price paid to borrow debt capital called?

A: The amount that is borrowed by the company from financial institutions, banks, or by issuing the…

Q: sources of financing through LO

A: Long term debt is a non current liability that is liable to be paid after one or more years.

Q: Define Debt Issue Costs.

A: Bonds: Bonds are a kind of interest bearing notes payable, usually issued by companies, universities…

Q: Explain the classification issues of short-term debt expected to be refinanced.

A: Short term debt: It refers to the financial obligation for the firm that needs to be paid within one…

Q: Why does the use of debt lower ROA?

A: Introduction: Debt can be characterised as an amount or sum owned by a person to another for…

Q: What is the debt to total assets ratio?

A: Debt to Total asset Ratio: Debt to total asset ratio is the relationship between the Total…

Q: What do we call the cost that a borrower must payto use debt capital?

A: Debt capital is the capital that is borrowed from various financial institutions or other lenders…

Q: Explain required rate of return on debt

A: Debt is some amount of money owed by a borrower to the creditor. Debt can be two types. One is…

Q: Compared to junior unsecured debt, subordinated debt exhibits __________ credit risk, __________…

A: The answer is option B. higher/ higher/ lower Compared to junior unsecured debt, subordinated debt…

Q: What are the benefits of using debt security?

A: The financial instruments which are bought by investors, or corporations, or mutual funds, are…

Q: Explain the nature of long term debt.

A: Nature of long-term debt: Long-term debts are the obligations of the company that are required to…

Q: Define required rate of return on debt

A: The required rate of return: This rate of return equates to the minimum return an investor would…

Q: Why does the use of debt lower the profit margin and the ROA?

A: Company needs to raise the fund to have the capital which needs for the business for multiple…

Q: Are debtors calculated at selling price or finished goods price? and why?

A: The word debtor comes from the word debt which means a company or an individual having a debt…

Q: Which form of financing has the lower after-tax cost, debt or equity? Why?

A: There are two sources of financing for a company. One is debt financing and another is equity…

Q: What is the cost of accrued liabilities? If accruals have such a low cost, why don’tfirms use them…

A: An accrued liability refers to an expense a business has incurred during a specific period but has…

Q: WHY IS EQUITY MORE EXPENSIVE THAN DEBT?

A: Equity is owner's equity or shareholder's equity. It represents the value that would be returned to…