In General,U.S.firms

question 4

Multiple Choice

In general,U.S.firms:

• A)tend to overweigh debt in relation to equity.
• B)that are highly profitable tend to have lower target debt-equity ratios than unprofitable firms.
• C)tend to maintain similar capital structures across all industries.
• D)tend to maximize the use of every dollar of the tax benefits of debt.
• E)that are family-owned tend to have very low levels of debt.

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Definitions:

Following Year

The year that comes after the current year, often in the context of planning or forecasting.

Pure Play Method

A valuation method that compares a company to others within the same industry or sector with a single focus or product line.

Firm's Cost of Capital

The minimum return that a company must earn on its investments to maintain its market value and satisfy its creditors and investors.

Specific Division

A distinct business unit within a larger organization, often focused on a particular product line or market segment.