Capital Structures of Foreign Affiliates Should

question 32

Multiple Choice

Capital structures of foreign affiliates should

• A)conform to the standards set by local companies
• B)vary in order to take advantage of opportunities to reduce overall risk and financing costs
• C)be very similar to the parent's capital structure because this is what determines the firm's risk profile
• D)conform to the standards established by other foreign units

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Definitions:

Direct Materials

Raw materials that can be directly traced to the production process of a product and are considered a part of the finished product.

Direct Labor

The cost of wages paid to workers directly involved in the production of goods or services.

Job Order Cost Sheets

Documents that record and track the costs associated with a specific job or order.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor directly used in creating the good.