True or False: When a company borrows money to finance the purchase of an asset to use in its business, one of their likely goals is to earn a rate of return on that asset which is lower than the interest rate on the loan borrowing. Select one: True False
Q: Which of the following statements is CORRECT? O The more depreciation a firm reports, the higher its…
A: Depreciation means reduction in value of fixed assets over the period of time. It is for normal wear…
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A: operating cash flows - cash flows from the operations of the business are known as operating cash…
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A: The answer is stated below:
Q: debt financing.
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A: The most buyer-friendly approach for items representing a hard claim that must be paid post-close in…
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A: As far as concerned about the lease If we buy the asset from market certain kind of taxes can be…
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A: A follow-up question about loan amount Loan is the money which has been borrowed by the company…
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A: Short-term debt, additionally called current liabilities, is a company's monetary commitments that…
Q: whether the statement is true or false.
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A: Statement 1: Debt utilization ratios measure a company's debt status in relation towards the total…
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A: Securitization is the procedure where an issuer designs a marketable financial instruments by…
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A: 1. Short-term financial policies that are flexible with regard to current assets includes keeping…
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A: The correct answer for the above mentioned questions in the following steps for your reference.
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A: The statement is False. Positive covenants, part of a loan's terms, do require the borrower to…
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A: Leasing is a financial arrangement in which a single party (the lessor) owns an item and allows…
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A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: we know that depreciation is linked to the net cash flows of the company's investments. In fact, any…
A: Depreciation expense: Depreciation expense is the reduction in a particular asset due to its use or…
Q: Which of the following is a disadvantage of long-term debt as a means of company financing? Group…
A: Funds are very important and necessary for smooth running of a business organization. A business has…
Q: Which of the following circumstances would result in an increase in cash from operations but not an…
A: Cash flow statement: It is a statement which reports the cash inflows and outflows of a business…
Q: Which of the following is incorrect about debt financing? A. Debt financing always generates excess…
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Q: There are advantages and disadvantages of debt financing in contrast to equity financing. Which of…
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A: A bank loan is a financial arrangement in which a bank provides funds to a borrower in exchange for…
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- 1.There are two significant benefits of obtaining a loan over investing capital:a. the money does not have to be repaid, and lenders usually take an active interest in their creditorsb. the investment does not have to be repaid, and no ownership of the company is surrenderedc. no ownership of the company is given up or surrendered, and interest payments are tax deductibled. banks are dependable providers of venture funding, and interest charges are tax deductible2.A _________ aims to improve a good or service's revenue by increasing marketing activities or increasing production ability and performance.a. product line extension strategyb. geographic expansion strategyc. market penetration strategyd. strategic alliance strategy3.Entrepreneurs should be aware of three issues about business growth. What are the issues?a. a business's valuation increases with its growth, a business can grow too fast, and business growth is a top priority of most entrepreneurial firmsb. not all businesses…Which of the following is not a reason for the issuance of long-term liabilities? Debt financing dilutes ownership interest. Debt may be the only available source of funds. Debt financing may have a lower cost. Debt financing offers an income tax advantage.Which of the following statements are true? I. Financial leasing can still provide off-balance sheet financing. II. The cost of capital for a financial lease is the interest rate the company would pay on a bank loan. III. An equivalent loan's principal plus after-tax interest payments exactly match the after-tax cash flows of the lease. IV. It makes sense for firms that pay no taxes to lease from firms that do. Select one: O a. II, III and IV only O b. I. Il and II. O. Il and IIl only O d. I, II, II, and IV
- The borrowing base used to guarantee collateral on an operating line of credit is highly dependent on the valuation rates allowed on short-term assets by the lender. A. True B. FalsePlease Make this notes clearer and perfectly written. Here is my notes: At times companies engage in repurchase agreements; are from the perspective of the borrowers. they borrow money to finance themselves short term and the value of the money they borrow whatever that value is they agreed to pay the lenders when they return the money with a higher value even if they borrow low and pay high and that difference is their cost of funding repurchase agreements repurchase agreements are always collateralized with high quality paper government securities it can also be a commodity like precious metals gold or silver repos besides the collateralization. The federal funds that's an important take away that one member of the treasury reserve system lends to another short term loans that one member of the treasury reserve system lends to another The banks have surplus reserves with our central bank some are in deficit the who the ones who are in surplus lend to the ones who are in deficit…Which of the following is an example of faithful representation? A Showing lease payments as a rental expense B Being prudent by recording the entire amount of a convertible loan as a liability C Creating a provision for staff relocation costs as part of a planned restructuring D Recording a sale and repurchase transaction with a bank as a loan rather than a sale
- According to the textbook, the definition of asset is "asset are resources that are controlled by a business from which the economic benefits are expected to flow to the business.", the definition of liabilities are "they represents negative future cash flow for the enterprise."But asset included liabilities, isn' t that contradict the definition of asset?Why is the depreciation tax shield a component of analyzing investment decisions? O A. Depreciation causes a cash outflow that is added to determine net income. O B. Though no cash was paid out, depreciation was included on the tax return, which caused the company to pay taxes on the amount of depreciation. O C. Depreciation lowers cash outflows for income taxes paid. O D. Depreciation creates cash flows that do not appear on the income statement.Which of the following statements about "avoidable interest" is false? it is computed only on self-constructed assets. it is computed using a weighted-average interest rate on debt and equity financing. it increases assets on the balance sheet. O it is an approximation of the interest expense the firm would have incurred if it financed all construction through debt.
- True (t) or False (f) _____ A reason some companies purchase investments is because they generate a significant portion of their earnings from investment income.Debt financing requires the entrepreneur to repay the amount borrowed plus interest. True or False True FalseWhich of the following is nota reason why some companies lease rather than buy? A. Leasing may allow you to borrow with little or no down payment. B. Leasing can improve the balance sheet by reducing long-term debt. C. Leasing can lower income taxes. D. Leasing transfers the title to the lessee at the beginning of the lease.