What Are the Two Main Benefits of Using the Measure

question 33

Multiple Choice

What are the two main benefits of using the measure of Capital gearing = Long- term debt/Total market capitalisation?

• A) It is generally closer to the market- value- based gearing measures.
• B) It exaggerates the effect of financial distress.
• C) It gives some indication of the relative share of the company's total value belonging to debtholders and shareholders.
• D) It ignores the fact that many firms have no access to overdrafts or similar borrowing.

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Definitions:

Energy And Food Prices

The costs associated with obtaining and consuming energy resources and food commodities, which can significantly impact economic conditions and living standards.

Economic Depression

A prolonged period of significant decline in economic activity across an economy, characterized by high unemployment rates, low output, and a contraction in spending and investment.

Mixed Economy

An economic system blending elements of market, command, and traditional economies, featuring both private and public ownership of resources.