In General,the Capital Structures Used by Non-Financial U.S.firms

question 15

Multiple Choice

In general,the capital structures used by non-financial U.S.firms:

• A) typically result in debt-to-asset ratios between 60 and 80 percent.
• B) tend to converge to the same proportions of debt and equity.
• C) tend to be those that maximize the use of the firm's available tax shelters.
• D) vary significantly across industries.
• E) None of the above.

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Definitions:

Periodic Inventory System

An accounting method in which inventory levels and cost of goods sold are determined at the end of an accounting period based on a physical count.

Gross Method

An accounting approach that documents purchases at their complete invoice cost without subtracting any offered cash rebates.

Credit Terms

The conditions under which credit will be extended to a customer, including the repayment period, interest rate, and any discounts for early payment.

Gross Margin Ratio

A financial metric expressing the percentage of revenue that exceeds the cost of goods sold, used to assess a company's financial health.