A Company Has Significant Uncapitalized Operating Leases A) Option a
B) Option B
C) Option C
D)

question 92

Multiple Choice

A company has significant uncapitalized operating leases. This company has positive net income. If these were capitalized the effect on the following ratios would be: $$\begin{array} { | l | l | l | } \hline & \text { Times interest earned } & \text { Debt/equity ratio } \\\hline \text { A) } & \text { Increase } & \text { Increase } \\\hline \text { B) } & \text { Increase } & \text { Decrease } \\\hline \text { C) } & \text { Decrease } & \text { Decrease } \\\hline \text { D) } & \text { Decrease } & \text { Increase } \\\hline\end{array}$$

• A) Option A
• B) Option B
• C) Option C
• D) Option D
• Horace Corporation has $200,000 of convertible 5% bonds. Each $500 bond is convertible into 50 shares of common stock. The bonds were sold at par and are currently trading at par, and the required return on nonconvertible bonds of similar risk is 11%. Common stock is trading at $ 23 per share.

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Definitions:

Latent Homosexual

A term historically used to describe a person who has homosexual desires or tendencies that are not openly expressed or consciously acknowledged.

Defence Mechanism

An unconscious tactic employed to shield an individual from the distress caused by thoughts or feelings that are deemed unacceptable.

Identification

A psychological process in which an individual assimilates an aspect, property, or attribute of the other and is transformed, wholly or partially, after the model the other provides.

Self-Esteem

An individual's subjective evaluation of their own worth, or the confidence and satisfaction in oneself.