In Germany, What Does a Company That Has No Debt

question 18

Multiple Choice

In Germany, what does a company that has no debt indicate?

• A)It is a superior company with stable earnings.
• B)It is a safer company to invest in than a company with debt.
• C)It is highly supported by financial markets.
• D)The banks do not have any faith in the company.

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Definitions:

Unfavorable

A term used in budgeting and variance analysis indicating costs exceeded the budget or revenue fell short.

Variable Overhead Efficiency Variance

The difference between the expected variable overhead costs based on standard costing and the actual variable overhead incurred, attributable to efficiency.

Materials Price Variance

The difference between the actual cost of raw materials and the standard cost expected to be paid, reflecting changes in price.

Raw Materials Price Variance

A measure of the difference between the actual cost of raw materials and the expected (standard) cost.