why would a business lean towards a rights issue rather than pay for long-term loans?

Q: Why do creditors usually accept a plan for financial rehabilitation ratherthan demand liquidation of…

A: Financial rehabilitation: Financial liquidation is mechanism whereby the corporation sells its…

Q: Short term financing is financing that a borrowers pay off over shorter payment period. Small…

A: Short-term loan Short-term loan is a type of loan that is obtained to support a temporary personal…

Q: What is meant by a participation loan? What does the lender participate in? Why would a lender want…

A: Participation loans: It is a type of loan in which the lender shares the net operating income of the…

Q: How did Office Smart increase its market share—possibly by lowering credit st

A: : Credit standards: Credit standards can be defined as a set of guidelines existing in the company…

Q: Which of the following is a reason that banks may favor fee compensation over balance compensation?…

A: In order to increase their deposits and use them for loan, banks usually prefer fee compensation…

Q: What is adverse selection?  Why does it predict that lenders will prefer to arrange loans through a…

A: The loan is the funds that a borrower takes from the lender at a certain rate of interest for a…

Q: How would the transactions be reconciled if the allowance for bad debt is converted to a bad debt…

A: This question said that The company made the provision or provided for allowance for bad debt as per…

Q: Is it possible for a new business venture to be profitable and yet have financial trouble?

A: Corporate finance is referred as the decision of the firm to take capital investments and other…

Q: starting a business, is it okay to start with having debt during the early stages? What dictates the

A: Answer A company needs a financial capital to operate its business. For that many companies,…

Q: Which of the following type of loan is best used for temporary shortfalls of income? a. Secured…

A: Loans can be short term loans or long term loans

Q: What can go wrong with financial leverage? Should it be used at all by a business?

A: Financial leverage refers to a term that tells us the use of money which one borrowed means the debt…

Q: what is ADVANTAGES AND DISADVANTAGES OF THIS MORATORIUM FOR THE BANKS AND BORROWERS? provide…

A: A moratorium is a temporary cessation of activity until future circumstances necessitate its lifting…

Q: why do banks consider interest on loans to be important?

A: Bank is defined as the financial institution, which accepts the deposits from public as well as…

Q: What are some different methods that can be used for customer returns/bad debt?

A: Bad debts they are the expenses that are book by the company for the credit sales made by the…

Q: Why is interest paid on amounts borrowed from banks and other lenders considered to be anoperating…

A: Cash Flow Statement: Cash Flow Statement is a fundamental financial statement that renders valuable…

Q: How banks can improve their return on equity and what are its negative externalities.

A: RoE is ubiquitous in banks, serving as both an indicator of overall performance and a means of…

Q: increasing collection period for trade receivable suggest about a firm’s credit policy

A: The average collection period is the average number of days required to collect invoiced amounts…

Q: Too much investment in current assets reduces firm profitability, whereas too little investment in…

A: Too much investment in current assets reduces firm profitability: The firm that invests more in…

Q: Does its management typically have complete control over a firm’s credit policy? As a general…

A: SOLUTION:- Management does not have complete control over a firm's credit policy as credit policy is…

Q: Related to ethics and contracts, why do payday loans appear to be an ethical issue?

A: Payday loans are small ticket loans for a short duration. The borrower pays back the loan when he…

Q: True or False: When a company borrows money to finance the purchase of an asset to use in its…

A: Every organization's wants to achieve that much earing so that they can save amount after paying its…

Q: Which of the following can impose serious economic consequences on a businessman? O a. Having more…

A: Sole proprietor or businessman has a disadvantage of unlimited liability under sole proprietorship…

Q: Companies borrow because it is in their best interests financially.

A: The given statement is True..... Companies borrow because it is in their best interests…

Q: Discuss the profit and loss sharing principles based on Mudarabah in Islamic banking during a…

A: Mudarabah: This product is used to help the businesses financing the businesses. The bank also…

Q: e usage of financial intermediaries as middlemen for these transactions actually increased?

A: Financial intermediaries are those people  who act as middlemen for financial activities. Financial…

Q: Why might a company’s board of directors decide tolease office space even though it would be more…

A: A Lease is a contract outlining the terms under which one party agrees to rent property owned by…

Q: A bank that grants loans to firms in a many different lines of business:  will increase its…

A: When a bank grants loans to firms in different lines of business then it has to incur more expenses…

Q: Why is it that oftentimes banks refuse to lend to many borrowers even though they offer high…

A: Analysis of the given option: i) To reduce the exposure to diversification risk Remark-By…

Q: What is the main purpose of loan loss provisioning? Explain the concepts of incurred loss model and…

A: The loan loss provision is the cash reserve created by the banks for the future credit risk. The…

Q: How do legal considerations affect a firm’s credit policy?

A: Four elements of credit policies are as follows: 1) Cash discount 2) Credit period 3) Credit…

Q: Which is more favorable for a business - huge debts or small debts? Justify your position

A: Stockholders’ equity is the measure of assets staying in a business after the sum total of the…

Q: Which of the following loans can be used for business expansion? a. Long term loan b. Line of Credit…

A: Business expansion will entail buying new plants and machinery, new equipment, new facilities etc.…

Q: Why would any seller offer trade financing, since it ties up working capital without generating any…

A: Introduction: Trade finance can be defined as a financial assistance which is provided in…

Q: Why have banks been losing income advantages ontheir assets in recent years?

A: The growth of the cash equivalent market and bond certificate market implies that firms aren't any…

Q: Why do analysts need to consider different factors when evaluating a company’s ability to repay…

A: Short-term debt or current liabilities refers to the company's financial obligations to the…

Q: Why might the cost of a mortgage loan be greater than the cost of using unsecured corporate debt to…

A: A mortgage shall be a credit the borrower utilizes to buy or retain a house and accepts to repay…