All of the Following Are Features of Debt Financing Except

question 115

Multiple Choice

All of the following are features of debt financing except

• A) it must be repaid by a deadline.
• B) it makes regular and fixed claims on income.
• C) it may lead to challenge for control of company.
• D) its interest is tax deductible.
• E) it constrains management flexibility.

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Definitions:

Operating Income

The profit realized from a business's core operating activities, excluding deductions of interest and taxes.

Invested Assets

Assets that are purchased or acquired for the purpose of generating income or appreciating in value.

Managerial Efficiency

Refers to the effectiveness with which managers utilize resources to achieve an organization's objectives and optimize operations.

Investment Turnover

A ratio that measures the efficiency of a company in generating sales from its investments in assets.