What Are Executory Costs

question 116

Multiple Choice

What are executory costs?

• A) Maintenance costs that are applicable to only operating leases.
• B) Maintenance costs that are incurred only when the asset is leased.
• C) Maintenance costs that are incidental costs in a lease that would be incurred by the lessee independent of whether the lessee had purchased or leased the asset.
• D) Maintenance costs that are applicable to only finance leases.

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Definitions:

External Financing

Funds a business obtains from outside sources, such as loans, investments, or grants, to support its operations or growth.

Dividend Payout Ratio

A financial metric that shows the percentage of a company's earnings paid to shareholders as dividends, reflecting the company's dividend policy and financial health.

Maximum Rate of Growth

The highest possible expansion rate that a business can achieve without obtaining additional financing from external sources.

Sustainable Rate Of Growth

The maximum rate at which a company can grow its revenues without needing to obtain additional financing.