Changes in a Firm's Bond Rating Affect Its Ability To

question 48

Multiple Choice

Changes in a firm's bond rating affect its ability to:

• A) claim deductions in tax liability computation.
• B) procure raw material in sufficient quantity for manufacturing processes.
• C) increase the coupon rate on bonds issued to investors.
• D) borrow long-term capital and the cost of such funds.
• E) exercise a call provision on its bonds.

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Definitions:

Opening Balance Equity

An account used in accounting to balance the books when starting a new company file or reconciling accounts.

Retail Customers

Individuals who purchase goods or services for personal use, not for manufacturing or resale.

Sales Tax

A tax imposed by government on the sale of goods and services, usually calculated as a percentage of the selling price.

Manufacturing Tax

Manufacturing tax refers to taxes imposed on goods produced within a country; the specifics of these taxes can vary by location and product type.