Which of the Following Is NOT a Factor for Determining

question 11

Multiple Choice

Which of the following is NOT a factor for determining whether to use the active or passive approach to capital structure changes?

• A) How much the firm faces in flotation costs under the active management approach
• B) How much the firm faces in debt costs under the active management approach
• C) How quickly the firm is growing
• D) How strongly and how quickly they wish to change the capital structure

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Definitions:

Perpetual Inventory System

An accounting method that records inventory transactions in real-time, immediately reflecting changes in inventory levels.

Purchase Of Inventory

The act of acquiring goods or raw materials that a company intends to sell in its normal business operations.

Terms 2/15

A payment term indicating that a buyer can take a 2% discount on the invoice amount if the payment is made within 15 days of the invoice date.

Net 45

This payment term requires the buyer to pay the total net amount due within 45 days after the invoice date or goods receipt.