The Optimal Capital Structure

question 69

Multiple Choice

The optimal capital structure:

• A) Will be the same for all firms in the same industry.
• B) Will remain constant over time unless the firm does an acquisition.
• C) Of a firm will vary over time as taxes and market conditions change.
• D) Places more emphasis on the operations of a firm rather than the financing of a firm.
• E) Is unaffected by changes in the financial markets.

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Definitions:

Released

In economic or financial contexts, this term usually refers to information, products, or assets that have been made available to the public or specific markets.

Absorption Costing

In this accounting procedure, the full scope of manufacturing costs, covering direct materials, direct labor, and both kinds of manufacturing overhead—variable and fixed—is accounted for in the product's pricing.

Ending Inventory

The total value of goods available for sale at the end of an accounting period.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted; this contribution covers fixed expenses and generates profit.