Question

Which one of the following measures is an estimate of a business’s true economic profit for the year?

Group of answer choices

The return on invested capital

Economic value added

Market value added

Return on assets

Net income

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Question 102 pts

Which of the following are disadvantages of short-term debt financing?

I. Its interest expense can fluctuate widely

II. The company will face loan renewal risk

III. Short-term loans can be arranged much faster than long-term debt.

IV. It provides increased flexibility to borrowers.

Group of answer choices

I only

I and II

I and III

II and III

III and IV

Answer 1

Answer 1)

Economic value added is the true economic profit for any co as it shows how much a co has earned beyond what is required by the investors.

Option 2 is correct.

Answer 2)

Its interest expense can fluctuate widely - This is the only disadvantage on the short term borrowings amoung the examples given above. All others are advantages to the short term borrowers.

Option 1 is correct. I only.

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