All Things Being Equal,firms Would Typically Prefer to Disclose Low

question 48

Multiple Choice

All things being equal,firms would typically prefer to disclose low levels of debt because:

• A) Any debt is a bad thing in the capital structure of a business.
• B) Additional debt may lead to a technical breach of a firm's contractual agreements with existing debt-holders and lead to the possible wind-up of the business or the need to renegotiate the contract.
• C) The level of recognised debt will affect the profitability of the business.
• D) Recognising debt in the income statement may lead to a decrease in management bonuses that are based on the times-interest-earned and debt-to-assets ratios.
• E) None of the given answers.

---

Definitions:

Gossip Chains

A type of communication that occurs when one individual creates and spreads untrue or inaccurate information through the organization.

Barriers To Communication

Obstacles that impede the exchange of information between individuals or groups, leading to misunderstandings or conflicts.

Nonverbal Cues

Communication without words, including gestures, facial expressions, posture, and other body language, which can convey messages and emotions.

E-mails

Electronic messages sent over the Internet, used for personal, academic, or business communication.