Other Factors Affecting Capital Structure
Trending Questions
___ is an important determinant of a company's ability to trading on equity.
ICR
ROI
DSCR
All of the above
DSCR is a measure of the cash flow available to pay current debt obligations. State true and false.
True
False
Debt Service Coverage Ratio is EBIT-Tax+depreciation divided by Interest + Principal + Dividends. State true or false.
True
False
Higher business risk means higher fixed operating costs, eg: rent, salaries, etc. State true or false.
True
False
___ aims to reduce the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds.
Financial Planning
Capital Structure
Financial Management
None of the above
Financial leverage is the amount of total debt in the capital. It is calculated as:
Debt equity ratio = Debt/Equity
Proportion of debt in the total capital = Debt/Debt+Equity
Both A and B
None of these
Financial leverage is called favourable if:
ROI is higher than the cost of debt
Debt is easily available
Return on Investment is lower than the cost of debt
If the degree of existing financial leverage is low
Other things remaining the same, an increase in the tax rate on corporate profits will:
make the debt relatively cheaper
None of these
make the debt relatively the dearer
have no impact on the cost of debt
- Business
- Financial
- Administrative
- Management
- Business
- Financial
- Administrative
- Management