Which of the Following Criteria Would Be Determinants of the Appropriate

question 92

Multiple Choice

Which of the following criteria would be determinants of the appropriate ratio of debt to equity if a company should not take on more debt than can be serviced under conservative economic forecasts?
i.Maximisation of shareholder wealth
ii.Industry norms
iii.History of the ratio for the firm
iv.The stage of the current economic cycle
v.Limit imposed by lenders
vi.The company's capacity to service debt

• A) i, iii, v, vi
• B) ii, iii, v, vi
• C) ii, iii, iv, v
• D) iii, iv, v, vi

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Definitions:

Mutual Gain

A situation or outcome where all parties involved in a negotiation or transaction benefit or achieve their objectives.

Objective Criteria

Measurable or observable standards used to evaluate performance, outcomes, or decisions, free from personal biases.

Third Party

An individual or group not directly involved in a transaction or dispute but who may be affected by its outcome or may play a role in its resolution.

Conflicts

A situation where the interests, needs, goals, or values of involved parties interfere with one another.