Of the Following, All Are Conclusions That Can Be Drawn

question 117

Multiple Choice

Of the following, all are conclusions that can be drawn from the capital structure puzzle EXCEPT:

• A) In the framework of the static theory of capital structure, a firm can precisely identify its optimal capital structure.
• B) Firms with tax shields from other sources such as depreciation will benefit less from leverage.
• C) Firms in lower tax brackets will tend to benefit less from increases in financial leverage.
• D) The financial structure that minimizes WACC is the one that will maximize the value of the firm.
• E) All else the same, firms with tangible, liquid assets will have an incentive to borrow more.

---

Definitions:

Billing Electronically

The process of sending bills or invoices to customers through electronic means, such as email or online platforms, rather than paper mail.

Total Collection Time

The average duration it takes for a business to collect payments owed by its customers.

Zero-balance Account

A type of bank account that maintains a balance of zero by automatically transferring funds from a master account in an exact amount to cover checks presented.

As-needed Basis

A method or arrangement where resources are utilized or tasks are performed as and when required, rather than on a scheduled or continuous basis.