It Is Not Optimal to Borrow Any Further Funds When

question 63

Multiple Choice

It is not optimal to borrow any further funds when

• A) the average borrowing costs start to equal or exceed the ROA.
• B) the company's net profit margin falls below the average borrowing costs.
• C) the company's debt-to-equity ratio exceeds 50%.
• D) the average borrowing costs start to equal or exceed the ROE.

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Definitions:

Hyperreflexia

An exaggerated response of the muscles following a stimulus, indicative of disturbances in the central nervous system.

Fasciculations

Involuntary, small, rapid muscle contractions or twitches visible under the skin, often benign but can be symptomatic of neurological conditions.

Positive Babinski

A reflex action in which the big toe remains extended or extends upward when the sole of the foot is stimulated, indicating neurological abnormality.

Dorsiflexion

The movement that brings the top of the foot toward the shin, decreasing the angle between the dorsal surface of the foot and the leg.