JB Enterprises Borrows by Issuing Bonds

question 29

Multiple Choice

JB Enterprises borrows by issuing bonds. If JB earns more on an investment than the interest it pays on its bonds, JB is:

• A)trading on the equity.
• B)diluting control of its business.
• C)showing a leverage ratio of 1.0.
• D)decreasing its earnings per share on common stock.

---

Definitions:

Weighted Average Delay

An estimation of the average delay in time, considering the relative importance or weight of each contributing factor.

Collection Delay

The time lag between issuing an invoice and receiving payment, impacting cash flow and liquidity.

Average Amount

A calculated central value of a set of numbers which is typically determined by dividing the sum of the values in the set by their number.

Average Daily Receipts

The average amount of cash flow received by a company on a daily basis.