Which of the Following Is Unlikely to Influence a Firm's

question 91

Multiple Choice

Which of the following is unlikely to influence a firm's choice of capital structure?

• A)Taxes
• B)Agency costs and benefits of leverage
• C)Transaction costs
• D)All of the above influence capital structure decisions.

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Definitions:

Fixed-Asset Turnover

A financial ratio that measures a company's ability to generate sales from its fixed assets.

ROA

Return on Assets; a financial ratio indicating how profitable a company is relative to its total assets.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how well a company uses investments to generate earnings growth.

Times-Interest-Earned Ratio

This financial metric measures a company's ability to meet its debt obligations based on its current income, calculated by dividing earnings before interest and taxes (EBIT) by interest expenses.