The Following Benefits Occur to the Corporation After Forced Conversion

question 14

Multiple Choice

The following benefits occur to the corporation after forced conversion of a convertible bond except for which one?

• A)Lower times interest earned ratio
• B)Lower debt-to-asset ratio
• C)Higher earnings after taxes
• D)All of these options are benefits.

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Definitions:

Going-concern Assumption

An accounting principle that assumes a company will continue to operate for the foreseeable future, not liquidate or reduce its operations significantly.

Operating

Pertaining to the ongoing, day-to-day activities necessary for an entity to function, including production, sales, and administrative tasks.

Business Ownership

Business Ownership entails the possession, control, and responsibility over a business entity, including rights to its assets and liabilities.

Corporation

A legal entity that is separate and distinct from its owners, offering Limited liability to its shareholders, and having the ability to raise capital through issuing stock.