Which of the following is true regarding a company assuming more debt?   Select one: a. Assuming more debt is always bad for the company b. Assuming more debt reduces leverage c. Assuming more debt can be good for the company as long as they earn a return in excess of the rate charged on the borrowed funds d. Assuming more debt is always good for the company

Q: Which of the following statements is FALSE? As debt increases, the risk associated with bankruptcy…

A: Source of raising capital include: Equity financing Debt financing Loans from financial…

Q: Which one of the following statements is correct if the pecking order theory holds? a. Firms with…

A: According to the pecking order theory, managers prefer to fund investment options using the firm's…

Q: If the times interest earned ratio: Multiple Choice Increases, then risk increases. Increases, then…

A: Increases, then risk decreses.

Q: 4. If a higher ROE is desirable, why don't companies take on large amounts of debt? a. Additional…

A: The return on equity is used to evaluate the profit earned on an investment considering the profit…

Q: Which one of the following is not an effect of an increase in leverage     Managers have fewer…

A: Increases in leverage means introducing more debt into capital structure.

Q: . The relationship between a firm's capital structure and other company attributes As a firm…

A: As a firm takes on more debt, its probability of bankruptcy increases. Other factors held constant,…

Q: Which of the following statements are incorrect regarding how much debt a company should borrow?…

A: The company has two types of capital Debt capital and equity capital. Interest on Debt capital…

Q: Two companies operate in the same industry and tend to follow practically identical patterns of…

A: Positive correlation means the movement of two variables in the same direction. The relationship…

Q: Please answer the following question according to the figure below. 1. How does increase in debt…

A: Debt and equity financing Each source of financing has its own advantages and disadvantages. For…

Q: A company needs financing. The CFO is proposing that her company issues debt rather than equity,…

A: 1. The CFO wants to take advantage of the prevailing low-interest rates with a view of taking…

Q: Answer as either true or false and provide a reason for why.   When a company pays dividends, its…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which of the following events is most likely to encourage a firm to INCREASE the amount of debt in…

A: Stability in the business will lead to increase in long term debt

Q: pany borrows, the higher will be its tax shields, therefore a company will always prefer to issue…

A: WACC is weighted average cost of capital after tax.

Q: The use of financial leverage by the firm has a potential impact on which of the following?…

A: Financial leverage refers to the use of debt capital in the capital structure of the company. The…

Q: one of the following is true regarding the business and financial risk: Select one: a. the business…

A: Business risk refers to that type of risk which involves the decline in profitability and stability…

Q: 9. A firm is considering actions which will raise its debt ratio. It is anticipated that these…

A: financial ratio analysis are considered to be an important or investor in order to make decisions…

Q: Which of the following would increase a company’s additional financing needed (AFN)? a) the…

A: AFN is used in context of business looking to expand. Additional funds needed are raised using notes…

Q: A company will prefer debt in its capital structure, if (tick the most appropriate alternative) (a)…

A: Any capital structure is composed of debt and equity. Both have their own pros and cons which affect…

Q: It can be true that for one industry, a certain level of debt is acceptable, but for another, it can…

A: The level of acceptable debt varies from one industry to another and while for one industry a given…

Q: The difference between the market value of the firm and the amount of money invested in the firm is…

A: An investor takes into consideration the market value of the company to decide whether investment…

Q: Which of the following is not one of the things that manager can do to reduce the capital ratio…

A: Paying out higher dividends to stockholders.

Q: the cost of debt is cheaper than the cost of equity. Does it imply that a firm should increase its…

A: Answer: Introduction: If a corporation raises capital through issuing debt securities like bonds it…

Q: Is this statement true or false? Please explain in detail As debt-financing is usually cheaper than…

A: Debt financing is a cheaper source of finance than equity financing because tax saving on interest.…

Q: Which is the quickest way to determine whether a firm has too much debt?

A: A business is supposed to be overleveraged when it is conveying an excessive amount of debt when…

Q: he required return on assets will change, if O a. one of the firm's business lines is closed. O b.…

A: Return on assets is income earned on whole assets after doing payments to all and it indicates the…

Q: Debt overhang occurs when: 1. A company is so indebted that it has little incentive to invest as…

A: Meaning of debt overhang: It is a situation in which a high amount of debt is there in the company…

Q: When a bank holds a lower level of capital, a given dollar level of profits represents a lower…

A: False

Q: Do you agree with each of the following statements? Explain. •EBITDA makes companies with…

A:

Q: A company’s dividend policy can also be affected by factors internal to the organization and by the…

A: Dividend Policy is the policy of a company where the distribution of retained earnings will be given…

Q: Debt-deflation leads to lower income because: O falling prices redistribute income from debtors to…

A: Debt deflation is an economic theory. It occurs when fall in prices leads to increase of debt burden…

Q: When examining​ tax, the optimal debt level is proportional to its current earnings. D. The…

A: Managers choose internal finance over outside sources. The weighted average cost of capital, risk…

Q: EBITDA makes companies with asset-heavy balance sheets look healthier than they may actually be.•…

A: It is abbreviation for Earnings Before Interest, tax , Depreciation, and Amortization. It is used to…

Q: The higher the debt-to-equity ratio, the less debt a company is using co finance its assets. O True…

A: Debt to equity ratio is an important leverage ratio that we use in the world of accounting and…

Q: There are advantages and disadvantages of debt financing in contrast to equity financing. Which of…

A: Debt financing has less risk as compared to equity financing, which is why the cost of debt is less…

Q: If a company has very weak cash flows, an investor would prefer to be at the ____ of the waterfall…

A: Cash flows are the inflows and outflows of cash that are received and paid by an organization in a…

Q: What is the primary reason for the higher cost of finance from shareholders than debt? a.…

A: A company can raise its finances in the form of debt or equity or a mix of debt and equity. Debt is…

Q: Which of the following statements is CORRECT? * Assume a corporation has less debt than what is…

A: The capital structure is a technique in which the company has use the mix use of debt and equity to…

Q: How would each of the following factors affectratio analysis? (a) The firm’s sales are highly…

A: Ratio analysis refers to the comparison of various financial data extracted from the financial…

Q: Which of the following is most consistent with using debt to reduce agency costs or conflicts?…

A: Statement number 4 is consistent with using debt to reduce agency costs or conflicts.

Q: The independence hypothesis is one of the theories explaining a firm's capital structure. Which of…

A: Capital Structure is a mix of source of external funds particularly combination of debt and equity…

Q: Which of the following statements is correct? A. If a firm’s assets are growing at a positive…

A: AFN stands for “additional funds needed,” and it refers to the additional resources that will be…

Q: A company that is leveraged is one that O a. contains debt financing so as to increase the return on…

A: SOLUTION- MEANING OF LEVERAGE- IT REFERS THE USE  OF DEBT BY THE COMPANY TO FUND ITS OPERATIONS AND…

Q: The cost of equity rises as the quantity of debt rises in each of the capital structure theories.…

A: A company issues debt and shares in such proportions that the overall cost of capital is low. The…

Q: Which of the following statements is CORRECT? * In most cases, increasing a company's debt ratio…

A: The question is multiple choice question. Required  Choose the Correct Statement.

Q: Why is the following statement true? “Other things being the same, firmswith relatively stable sales…

A: Introduction: This question is related to the concept of accounting and finance. Corporate money…