Lowering the Debt-Equity Ratio of the Firm Can Change the Firm's

question 76

Multiple Choice

Lowering the debt-equity ratio of the firm can change the firm's

• A)cost of equity and cost of debt.
• B)financial leverage.
• C)financial leverage, cost of equity, and cost of debt.
• D)financial leverage, cost of equity, cost of debt, and effective tax rate.

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Definitions:

Increased Demand

A situation where the desire or need for a product or service exceeds the existing supply at the current price.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Credit Sales

Transactions where goods or services are provided to a customer with an agreement to pay at a later date.

Cash Sales

Transactions in which goods or services are paid for with cash at the time of the sale.