Which of the Following Would Decrease the Financial Leverage of a Firm

question 223

Multiple Choice

Which of the following would decrease the financial leverage of a firm?

• A) Total assets increase and the debt-to-equity ratio remains constant.
• B) Total debt increases and total assets remain constant.
• C) Net new equity is sold and existing bonds are paid off.
• D) Net new bonds are sold and outstanding common stock is repurchased.
• E) Net new bonds are sold and short-term notes payable are paid off.

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Definitions:

Structural Variables

Aspects of an organization's setup, such as its hierarchy, departmentalization, and distribution of authority, that influence its functioning and culture.

Managerial Strategy

The set of actions, plans, and policies devised by management to achieve competitive advantage and meet organizational goals.

Differentiation

The process of distinguishing a product or service from others to make it more attractive to a particular target market.

Cost

The amount of money required to purchase something or the expense associated with producing a service or carrying out a project.