Question

In general, U.S. firms: Multiple Choice tend to overweigh debt in relation to equity. that are...

In general, U.S. firms:

Multiple Choice

  • tend to overweigh debt in relation to equity.

  • that are highly profitable tend to have lower target debt-equity ratios than unprofitable firms.

  • tend to maintain similar capital structures across all industries.

  • tend to maximize the use of every dollar of the tax benefits of debt.

  • that are family-owned tend to have very low levels of debt.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer :- Option B). that are highly profitable tend to have lower target debt-equity ratio than unprofitable firms.

Explanation :- The firms which are profitable will utilize its own funds in business rather than borowed funds (like for future investment decision, if any). The profitable firms will not borrow funds more as they are having sufficient equity (owners' funds), thereby, resulting in lesser debt presence in the business. Due to less debt, Target debt equity ratio will also be lesser for profitable firms.

The firms which are not in profit making position, will borrow more funds from outsiders as they are not having sufficient own funds, accordingly, Target debt-equity ratio will be higher for unprofitable firms (as compared to lesser debt-equity ratio for the profitable firms).

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Firms with high operating leverage tend to have: Multiple Choice High asset turnover and high return...
Firms with high operating leverage tend to have: Multiple Choice High asset turnover and high return on sales. Low asset turnover and low return on sales. Low asset turnover and high return on sales. High asset turnover and low return on sales. Decreased levels of short-term fixed costs.
Multiple Choice 9. Banks see a decrease in the value of its bond and loan portfolios...
Multiple Choice 9. Banks see a decrease in the value of its bond and loan portfolios when interest rates: A. decrease. B. increase. C. either increase or decrease. 10. Since the corona virus hit the U.S. in March, the stock market, as represented by the Dow Jones Industrial Average, is currently down approximately: A. 15% B. 30% C. 40% D. 50% 11. The risks that banks see the value of its bonds and loan portfolios when interest rates: A. decrease....
22. The needs of producers and consumers are BEST met at a point called _______________. A...
22. The needs of producers and consumers are BEST met at a point called _______________. A market equilibrium B supply equilibrium C demand equilibrium D market ceiling 19. A policy that makes use of protective tariffs and quotas is called _______________. A trade-wise decisions B protectionism C free trade D productivity boosters 18. Since we cannot have everything we want, we have to _______________. A face the problem of scarcity B make trade-offs C make choices D all of these...
CASE STUDY ON LEADERSHIP/ Aidensfield hospital currently faces major problems with staff, management, general performance and...
CASE STUDY ON LEADERSHIP/ Aidensfield hospital currently faces major problems with staff, management, general performance and service quality. It is conceivable that these problems are related to the ‘leadership’ styles adapted by those in charge. The senior management have proposed some changes within the organisation to hopefully make improvements but making such decisions requires an in-depth understanding of what is going wrong and why. Leadership as a concept is often considered in isolation when in reality, it is coherent with...
1. In which phase of the business cycle is the U.S. economy currently in? ________________. How...
1. In which phase of the business cycle is the U.S. economy currently in? ________________. How many months has the U.S. economy been in this stage of the business cycle? ___________ months 2. How long has the current expansion/recovery lasted to date? _________________ How does this compare to the average length of U.S. recessions since 1854? ______________________________. 3. What do the last four recoveries/expansions (that is, the current recovery/expansion and the previous three recovery/expansions), suggest about a new trend in...
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
In narrative essay format, I want you to address a business/organization case study using multiple concepts...
In narrative essay format, I want you to address a business/organization case study using multiple concepts from class. The case question and case text begin on page 5 of this document. You need to demonstrate their best understanding of management and organizational behavior theory, and the application of those ideas to improve the understanding of various issues. You need to clearly identify at least 3 distinct, substantive issues. For each issue you need to 1), identify evidence from the case...
Team 5 answer the questions What are 4 key things you learned about the topic from...
Team 5 answer the questions What are 4 key things you learned about the topic from reading their paper? How does the topic relate to you and your current or past job? Critique the paper in terms of the organization and quality. Incentive Systems             In this paper, we will focus primarily on financial rewards that companies use to attract, retain and motivate the brightest and most talented candidates in the labor market. By providing a reward system that...
Gender Bias in the Executive Suite Worldwide The Grant Thornton International Business Report (IBR) has described...
Gender Bias in the Executive Suite Worldwide The Grant Thornton International Business Report (IBR) has described itself as "a quarterly survey of business leaders from across the globe … surveying 11,500 businesses in 40 economies across the globe on an annual basis." 1 According to the 2011 IBR, the Asia Pacific region had a higher percentage (27 percent) of female chief executive officers (CEOs) than Europe and North America. Japan is the only Asia Pacific region exception. The report further...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT