Debt May Be the Preferred Form of External Financing for Many

question 107

Multiple Choice

Debt may be the preferred form of external financing for many firms because:

• A) most firms already have too much equity.
• B) tax rates on equity are lower.
• C) debt will not adversely affect the firm's financial ratios.
• D)equity issuance is considered by investors to be a negative sign.

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Definitions:

Buyer-supplier Relationship

The dynamic interaction and commercial linkage between purchasers and providers of goods or services, focusing on contract fulfillment and trust-building.

Early Supply Involvement (ESI)

A procurement strategy where suppliers are involved in the product development process at an early stage to enhance innovation and reduce costs.

Relationship Management

Strategies and practices for maintaining and enhancing relationships with clients, customers, and other stakeholders.

Need Recognition

The first stage in the buying process, where the consumer identifies a need or problem that needs to be solved or fulfilled.