The Pecking-Order Theory of Capital Structure Depicts the Fact That

question 10

True/False

The pecking-order theory of capital structure depicts the fact that firms prefer internal financing to avoid sending out adverse signals that may lower the stock price.

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Definitions:

Post-Closing Trial Balance

A list of all accounts and their balances after closing entries are made, verifying the equality of debits and credits.

Balance Sheet

A financial statement that displays the assets, liabilities, and shareholders' equity of a company at a specific point in time, showing the balance of income and expenditure over the preceding period.

Income Statement

A financial report that shows a company's revenues, expenses, and net income over a specific period, indicating financial performance.

Date Line

A hypothetical line on the earth's surface, generally following the 180° longitude, where the date changes as one travels east or west across it.