How Managers Choose to Finance the Business Does Not Affect

question 71

True/False

How managers choose to finance the business does not affect the rate of return to shareholders because the rate of return is based on how the company uses the assets it has,not whether or not they paid for the assets with debt or equity.

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Definitions:

Total Revenues

The entire sum of money earned from selling goods or services prior to deducting any costs.

Fixed Costs

Expenses that do not change in relation to the level of goods or services produced by a business, such as rent, salaries, and loan payments.

Off Season

A period of the year when a particular activity, typically related to tourism or agriculture, is at its lowest level of demand.

Average Variable Cost

The variable cost per unit of output, calculated by dividing total variable costs by the quantity of output produced.