Which One of the Following Is a Capital Structure Decision

question 40

Multiple Choice

Which one of the following is a capital structure decision?

• A)Determining the optimal inventory level
• B)Establishing the preferred debt-equity level
• C)Selecting new equipment to purchase
• D)Setting the terms of sale for credit sales
• E)Determining when suppliers should be paid

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Definitions:

Discontinued Operation

A component of a business that has been sold, disposed of, or is held for sale, and is reported separately in financial statements.

Consolidated Financial Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as one single economic entity.

Subsidiaries

Companies that are controlled by another company, often referred to as the parent company, through ownership of over 50% of the subsidiary's voting stock.

Goodwill Impairment

A decrease in the value of goodwill on a company's balance sheet, indicating that the expected future cash flows from an acquisition are lower than initially estimated.