Taggart Technologies Is Considering Issuing New Common Stock and Using

question 52

Multiple Choice

Taggart Technologies is considering issuing new common stock and using the proceeds to reduce its outstanding debt.The stock issue would have no effect on total assets,the interest rate Taggart pays,EBIT,or the tax rate.Which of the following is likely to occur if the company goes ahead with the stock issue?

• A) The ROA will decline.
• B) Taxable income will decline.
• C) The tax bill will increase.
• D) Net income will decrease.
• E) The times-interest-earned ratio will decrease.

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Definitions:

Corporate Culture

The shared values, beliefs, attitudes, and practices that characterize an organization and influence its employees' behavior.

Top-down

Refers to an approach or management style where decisions and policies are initiated at the highest level of an organization and then passed down through its ranks.

Horizontal

A term used to describe alignment parallel to the earth's horizon, often used to discuss layout, structure, or relationships within organizations or data visualizations.

Re-create

To create again or anew, especially in a way that is improved or modified.