All Else the Same, Firms with Stable, Predictable Income Streams

question 65

Multiple Choice

All else the same, firms with stable, predictable income streams will be able to:

• A) use less debt.
• B) use more debt.
• C) have lower D/E ratios.
• D) none of the options.

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Definitions:

Legally Operate

To conduct business activities in accordance with the laws and regulations of the jurisdiction in which the business exists.

Accrual Basis

An accounting method where transactions are recorded when they are earned or incurred, regardless of when cash transactions occur.

Accounting

is the systematic recording, reporting, and analysis of financial transactions of a business or individual.

Dividend Income

Income received from owning shares in a company, which is often taxable at different rates than regular income.