Disadvantages of Going Public Include All EXCEPT

question 56

Multiple Choice

Disadvantages of going public include all EXCEPT

• A) managers' tendency to focus on long-term profits.
• B) the high cost of the IPO itself.
• C) the costs of complying with ongoing SEC disclosure requirements.
• D) the transparency that results from this compliance can be costly for some firms.

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Definitions:

Debt Ratio

A financial metric that assesses a firm's level of indebtedness by dividing its total liabilities by its total assets.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by stockholders' equity.

Net Income

The company's net earnings following the subtraction of all costs and taxes from its income.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations using its current assets, calculated as current assets divided by current liabilities.