Which of the Following Statements Is True

question 12

Multiple Choice

Which of the following statements is true?

• A)If a firm has a project that management believes will be very successful, management is more likely to finance the project with debt financing than with new equity.
• B)Issuing new equity is a positive signal to investors.
• C)Issuing debt is a negative signal to investors.
• D)If a firm has a project that management believes will be very successful, management is more likely to finance the project with equity than with debt.

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Definitions:

Sales Commissions

Fees paid to salespersons or agents based on the value or volume of sales achieved, typically expressed as a percentage.

Fixed Selling Expenses

Costs associated with selling a product or service that do not change with the level of production or sales, such as salaries of sales personnel and rent of the sales office.

Sales Budget Report

A financial plan that estimates future sales, often broken down by month, sales unit, or product, to guide a company's sales strategies.

Budgeted Sales

The expected sales (in units or dollars) projected for a future period, often used for planning and performance evaluation.