Which Statement Is FALSE Concerning Capital Structure

question 3

Multiple Choice

Which statement is FALSE concerning capital structure?

• A) Firms with large amounts of tangible assets tend to use a lot of debt in their capital structures.
• B) When corporate profits are taxed at the corporate and personal level, the benefits of leverage are greatly reduced.
• C) Modern trade off theory predicts that a firm's optimal debt level is set by trading off the tax benefits of leverage against the agency costs of increased debt.
• D) Debt is used more frequently abroad (such as Germany and England) as international laws tend to favor debtors.

Evaluate the level of social interest and its implications on personality and adjustment.

Recognize feelings of inferiority and their influence on behavior.

Compare Adler's and Horney's theories in terms of superiority complex, safeguarding tendencies, and neurotic trends.

Apply Adler's theory to analyze real or hypothetical lives.

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Definitions:

Fixed Asset Turnover

A financial efficiency ratio that measures how well a company utilizes its fixed assets to generate sales.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity.

Stock Market

A public market for buying, selling, and issuing shares of publicly held companies, serving as a critical mechanism for price discovery and capital allocation.

Leverage Ratio

A financial metric used to measure the degree of a company's debt compared to its assets, equity, or operational cash flow.