Return on Equity Will Not Change If the Firm Increases

question 65

True/False

Return on equity will not change if the firm increases its use of debt.

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Definitions:

Disbursements Float

The time difference between when a payment is made by a firm and when the funds are actually withdrawn from the firm's bank account.

Preauthorized Payments

Automated payments set up to charge a bank account or credit card for recurring bills or subscriptions on a pre-set schedule.

Collection Float

The time period between when a check is deposited in a bank and when the funds are available in the account, impacting cash flow management.

Lockbox System

A lockbox system is a service offered by banks to companies for the receipt of payment from customers, utilizing a special post office box to speed up the collection and processing of check payments.