Which of the Following Is True Regarding a Company Assuming

question 22

Multiple Choice

Which of the following is true regarding a company assuming more debt?

• A)Assuming more debt is always bad for the company.
• B)Assuming more debt is always good for the company.
• C)Assuming more debt can be good for the company as long as they earn a return in excess of the rate charged on the borrowed funds.
• D)Assuming more debt reduces leverage.

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Definitions:

Distribution Center

A facility where goods are received, stored, and then distributed to consumers or retail outlets.

New Store

A newly established retail outlet or branch of a business that has recently started operations.

Financial Management

The practice of managing a firm's financial operations to achieve financial goals and profitability.

CFO

Chief Financial Officer, the senior executive responsible for managing the financial actions of a company.