Which of the Following Sources of Capital Is Said to Not

question 15

Multiple Choice

Which of the following sources of capital is said to not create the problems associated with financial distress?

• A)Commercial paper
• B)Ordinary shares
• C)Debt financing
• D)Preference shares

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Definitions:

ROA

Return on assets (ROA) is a financial ratio that shows the percentage of profit a company earns in relation to its overall resources.

Liabilities

Measurable obligations resulting from a past transaction; they are expected to be settled in the future by transferring assets or providing services.

Return On Assets

A profitability ratio that indicates how efficiently a company uses its assets to produce profit, calculated by dividing net income by total assets.