Which of the following factors influence how much debt a firm should take on?1 pointIndustry normsThe nature of the firm’s assetsFinancial slackThe overall level of interest ratesAll of the above

Which of the following is NOT one of the qualities which makes debt attractive to firms?Select one:a. The required return on debt is lower because, from the lender's point of view, debt is less risky than equity.b. It reduces the amount of corporate tax payable by firms by reducing the amount of taxable profit.c. Debt interest only gets paid when the company is making a profit.d. The cost of debt is generally less than the cost of share capital and hence can lower the overall cost of capital for a firm.

Question 1When a firm is determining its target debt ratio, which of the following is paramount? 1 pointThe impact on the firm’s profitsThe impact on the value of the firmThe impact on the control structure and governance The impact on financial flexibilityAll of the above are equally important

1.Question 1If a firm has a debt-to-equity ratio of 20%, then a firmborrows $1 for every $____ in equity.

Which of the following ratios is considered a measure of a company’s ability to pay long-term debt?Group of answer choicesprice/earnings ratiotimes-interest-earned ratioacid-test ratioearnings per share of common stock

Which of the following statements is NOT TRUE?Debt is costlier than equity.For the same business the firm can choose between the use of debt capital versus equity capital.Net profit can be substantially higher if debt is usedAll of the above