Describe "The More Debt,The Better" Statement with Regard to the Optimal

question 25

Essay

Describe "The More Debt,The Better" statement with regard to the optimal capital structure.

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Definitions:

Par Preferred Stock

A type of preferred stock that has a nominal face value and is entitled to dividends before any dividends can be issued to common stockholders.

Retained Earnings

Profits that a company has kept or retained rather than distributing to shareholders as dividends.

Net Income

The net income of a business once all costs, taxes, and expenses are deducted from its total revenue.

Dividend

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.