Which One of the Following Is a Result of a Company

question 46

Multiple Choice

Which one of the following is a result of a company issuing common stock instead of debt to finance the purchase of property?

• A)Leverage will be more effective.
• B)The company will probably experience cash flow problems.
• C)It will have a lower debt/equity ratio.
• D)It will report a lower net income.

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Definitions:

Fixed-Term Tenancy

A lease agreement for a property that is set for a specific period of time, at the end of which, the agreement either ends or must be renewed.

Express Contract

A clearly stated agreement, either written or spoken, where the terms are explicitly stated by all parties involved.

Periodic Tenancy

A lease interest in land for an indefinite period involving payment of rent at fixed intervals, such as week to week, month to month, or year to year.

Specify

To state or describe something clearly and precisely.