In General,the Capital Structures of U.S.firms

question 22

Multiple Choice

In general,the capital structures of U.S.firms:

• A)tend to overweight debt in relation to equity.
• B)employ less debt when the firm requires large amounts of tangible assets.
• C)are constant over time on a firm-by-firm basis.
• D)tend to be those that maximize the use of each firm's available tax shelters.
• E)vary significantly across industries.

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Definitions:

Income Tax Expense

The total amount of income tax a company is obligated to pay to the government, based on its taxable income for a particular period.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid out, respectively.

Internal Rate

This term might be incomplete or unclear; however, it is possibly referring to the internal rate of return (IRR), which is a metric used in financial analysis to estimate the profitability of potential investments.

Discount Rate

The rate of return that is used to find the present value of a future cash flow.