In Scenario 9-1 Above,the Primary Disadvantages of Using Debt Financing

question 14

Multiple Choice

In Scenario 9-1 above,the primary disadvantages of using debt financing are all but which of the following?

• A) It increases risk due to the possibility of insolvency.
• B) It allows a voice in management of the business.
• C) It has to be repaid.
• D) Leverage can enable returns to be lessened.

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Definitions:

Net Income

The earnings of a company after taking into account all expenses, including operational costs, interest, and taxes, subtracted from its total revenue.

Additional Advertising

Additional Advertising denotes the increased efforts or expenditures in promotional activities aimed at boosting sales or awareness beyond the initial or planned scope.

Scatter Diagram

A graphical representation that displays the relationship between two variables, typically to identify correlation patterns.

Cost Behavior

The way different types of production costs change when there is a change in level of production activity.