Use the Table for the Question(s)below

question 19

Multiple Choice

Use the table for the question(s) below.
Statement of Financial Position

-If the above statement of financial position is for a retail company,what indications about this company would best be drawn from the changes in leverage between 2014 and 2015?

• A)The company's risk has decreased.
• B)The company's risk is unchanged.
• C)The company may have a problem in meeting borrowing obligations in the future.
• D)The company has excellent growth prospects.
• E)The company is bankrupt.

Recognize the differences between the cost of capital components and the returns paid to investors in the underlying securities.

Understand the importance of market values in maintaining or achieving a firm's capital structure.

Calculate specific costs of capital components using given financial information.

Understand the process of calculating the cost of debt for bonds with various conditions.