Although the Use of Debt Provides Tax Benefits to the Firm,debt

question 4

Multiple Choice

Although the use of debt provides tax benefits to the firm,debt also puts pressure on the firms to:

• A)meet interest and principal payments which,if not met,can put the company into financial distress.
• B)make dividend payments which if not met can put the company into financial distress.
• C)meet both interest and dividend payments which when met increase the firm cash flow.
• D)meet increased tax payments thereby increasing firm value.
• E)None of the above.

Differentiate between multiple forms of business organizations based on their asset management, profit distribution, and member liability.

Analyze the formation, operation, and legal aspects of various business organizations through comparative analysis.

Discuss the benefits and limitations of forming a cooperative and how profits are distributed among its members.

Grasp the legal and operational distinctions between business trusts, joint stock companies, joint ventures, and syndicates.

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Definitions:

Treasury Stock

Shares that were issued by a company and then repurchased, reducing the amount of outstanding stock on the open market.

Operating Activities

Refers to the primary revenue-generating activities of a business, such as sales, service, and associated costs, which are reported in the cash flow statement.

Cash Payment

A transaction in which goods or services are paid for using physical currency or digital equivalents, immediately transferring value.

Wages

Compensation paid to employees for their labor, typically calculated on an hourly, daily, or piecework basis.