Sinking Funds Are Devices Used to Force Companies to Retire

question 26

True/False

Sinking funds are devices used to force companies to retire bonds on a scheduled basis prior to their maturity.Many bond indentures allow the company to acquire bonds for a sinking fund by either purchasing bonds in the market or selecting the bonds to be acquired by a lottery administered by the trustee through a call at face value.

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Definitions:

Current Ratio

A measure of how well a company can satisfy its short-term due debts, revealing its liquidity over the year.

Statement Of Financial Position

Another term for the balance sheet, a financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

Common-Size Statement

A financial analysis tool that displays line items as a percentage of one selected or common figure, facilitating comparisons across different financial periods or companies.

Total Sales

The entirety of a company's revenues generated from the sale of goods or services before any expenses are subtracted.