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- The cost of equity is _______. A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnoverDefine each of the following terms: Weighted average cost of capital, WACC; after-tax cost of debt, rd(1 – T); after-tax cost of short-term debt, rstd(1 – T) Cost of preferred stock, rps; cost of common equity (or cost of common stock), rs Target capital structure Flotation cost, F; cost of new external common equity, reEarned capital consists of additional paid-in capital and retained earnings. O True O False
- The term capital structure refers to_______ O a. Long-term debt, preferred stock, and common stock equity O b. Current assets and current liabilities O c. Shareholders' equity O d. Total assets minus liabilitiesDefine the terms paid-in capital and retained earnings.Describe retained earnings and distinguish it from paid-in capital.
- Equity is generally classified into two major categories: Select one: a. earned capital and contributed capital. b. contributed capital and appropriated capital. c. retained earnings and unearned capital. d. appropriated capital and retained earnings.for the ratio return on capital employed which of the following best describes capital employed : a- share capital b- share capital + reserves c- share capital + current assets d- share capital + fixed assetsCapital gearing ratio indicates the relationship between A. assets and capital B. loans and capital C. equity shareholders fund and long term borrowed funds D. debentures and share capital
- Which is a component of stockholder's equity? a. Sinking funds b. Deferred charges c. Accumulated other comprehensive income d. Realized capitalNet working capital is defined as (select one): A. current assets minus current liabilities. B. a ratio measure of liquidity best used in cross-sectional analysis. C. current liabilities minus current assets. D. the portion of the firm's assets financed with short-term funds.Net working capital is defined as:Select one:a. Fixed assets minus long-term liabilities.b. Current assets minus current liabilities.c. Total liabilities minus shareholders' equity.d. Current liabilities minus shareholders' equity.e. Total assets minus total liabilities.