Which of the Following Statements Is False

question 7

Multiple Choice

Which of the following statements is false?

• A) The data show a clear preference for equity as a source of external financing for the total population of Canadian firms.
• B) Debt as a fraction of firm value has varied in a range from 30-45% for the average firm.
• C) Capital expenditures greatly exceed firms' external financing, implying that most investment and growth is supported by internally generated funds, such as retained earnings.
• D) Firms in growth industries like biotechnology or high technology carry very little debt, whereas airlines, auto makers, utilities, and financial firms have high leverage ratios.

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Definitions:

Unit Costs

The cost incurred to produce, store, and sell one unit of a product or service.

Process Costing

An accounting methodology used to allocate costs to units of production in continuous or repetitive processes.

Work in Process Inventories

Inventories of products that are in the stages of being produced but are not yet completed.

Normal Spoilage

The expected amount of waste or loss that occurs under efficient operating conditions during the production process.