Capital Structure Principles

19 Questions19 MCQs0 Short Questions0 Long Questions
Showing 11 – 19 of 19 Questions
Page 2 of 2
Q11
❓ MCQ📘 ACC501📑 Lec 37🏷️ Capital Structure PrinciplesEasy🔁⭐💡🌟#business finance; financial risk; capital structure; fixed-income securities; leverage🎓Midterm; Quiz 1; Past Paper🏛️VU Midterm ACC501 Quiz Past Papers🏛️Solved MCQs with Reference by Students
__________ refers to the additional financial risk placed on common equity holders resulting from the extent to which fixed-income securities (debt and preferred stock) are utilized in a firm's capital structure.
  1. A.Financial risk
  2. B.Portfolio risk
  3. C.Operating risk
  4. D.Market risk
Q12
❓ MCQ📘 ACC501📑 Lec 37🏷️ Capital Structure PrinciplesHard🔁⭐💡🌟#business finance; break-even ebit; capital restructuring; financial leverage; earnings per share🎓Midterm; Quiz 1; Past Paper🏛️VU Midterm ACC501 Quiz Past Papers🏛️Solved MCQs with Reference by Students
Sony Corporation currently operates with zero debt and is evaluating a capital restructuring plan to introduce $1 billion of debt at an interest rate of 6.6 percent per annum. The company currently has 30 million common shares outstanding trading at $125 per share. What is the minimum break-even level of EBIT that Sony management must expect for this restructuring to increase Earnings Per Share (EPS)?
  1. A.$202,200,000
  2. B.$247,500,000
  3. C.$283,500,000
  4. D.$321,250,000
Q13
❓ MCQ📘 ACC501📑 Lec 37🏷️ Capital Structure PrinciplesEasy🔁⭐💡🌟#business finance; debt to equity ratio; capital structure; equity weight; financial mix🎓Midterm; Quiz 1; Past Paper🏛️VU Midterm ACC501 Quiz Past Papers🏛️Solved MCQs with Reference by Students
Flatiron Corporation maintains a target debt-to-equity ratio of 2/3. Based on this debt-to-equity ratio, what proportion of the corporation's total capital structure is financed through equity?
  1. A.66.67%
  2. B.33.34%
  3. C.0%
  4. D.60%
Q14
❓ MCQ📘 ACC501📑 Lec 37🏷️ Capital Structure PrinciplesEasy🔁⭐💡🌟#business finance; financial risk; fixed income securities; capital structure; leverage🎓Midterm; Quiz 1; Past Paper🏛️VU Midterm ACC501 Quiz Past Papers🏛️Solved MCQs with Reference by Students
---------------- refers to the extent to which fixed-income securities (such as debt and preferred stock) are utilized in a firm's capital structure.
  1. A.Financial risk
  2. B.Portfolio risk
  3. C.Operating risk
  4. D.Market risk
Q15
❓ MCQ📘 ACC501📑 Lec 37🏷️ Capital Structure PrinciplesHard🔁⭐💡🌟#business finance; break-even ebit; capital restructuring; financial leverage; eps break-even🎓Midterm; Quiz 1; Past Paper🏛️VU Midterm ACC501 Quiz Past Papers🏛️Solved MCQs with Reference by Students
Let’s imagine that Sony Corporation currently uses no-debt financing. It has decided to undergo capital restructuring by incorporating $1 billion of debt at 6.6 percent p.a. into its capital structure. Sony Corporation currently has 30 million shares outstanding priced at $125 per share. If the restructuring is expected to increase EPS, what is the minimum break-even EBIT level that Sony management must be expecting?
  1. A.$202,200,000
  2. B.$247,500,000
  3. C.$283,500,000
  4. D.$321,250,000
Q16
❓ MCQ📘 ACC501📑 Lec 37🏷️ Capital Structure PrinciplesMedium🔁⭐💡🌟#business finance; financial leverage; cost of capital; capital structure; m&m proposition i🎓Midterm; Quiz 1; Past Paper🏛️VU Midterm ACC501 Quiz Past Papers🏛️Solved MCQs with Reference by Students
Which of the following statements is INCORRECT regarding financial leverage?
  1. A.Financial leverage can dramatically alter the payoffs to the shareholders.
  2. B.Financial leverage refers to the extent to which a firm relies on the debt.
  3. C.Financial leverage must affect the overall cost of capital in any condition.
  4. D.Financial leverage may not affect the overall cost of capital.
Q17
❓ MCQ📘 ACC501📑 Lec 37🏷️ Capital Structure PrinciplesEasy🔁⭐💡🌟#business finance; interest expense; annual interest bill; debt cost; borrowing cost🎓Midterm; Quiz 1; Past Paper🏛️VU Midterm ACC501 Quiz Past Papers🏛️Solved MCQs with Reference by Students
Suppose a firm borrows Rs. 800,000 at an annual interest rate of 7 percent. What will be the firm's total interest bill per year if the corporate tax rate is 34 percent?
  1. A.Rs. 19,040
  2. B.Rs. 36,960
  3. C.Rs. 56,000
  4. D.Rs. 800,000
Q18
❓ MCQ📘 ACC501📑 Lec 37🏷️ Capital Structure PrinciplesEasy🔁⭐💡🌟#business finance; financial gearing; financial leverage; capital employed; debt ratio🎓Midterm; Quiz 1; Past Paper🏛️VU Midterm ACC501 Quiz Past Papers🏛️Solved MCQs with Reference by Students
___________ is concerned with the financial relationship between the long-term debt liabilities that a business carries and its total capital employed.
  1. A.Gearing
  2. B.Acid test ratio
  3. C.Working capital management
  4. D.All of the given options
Q19
❓ MCQ📘 ACC501📑 Lec 37🏷️ Capital Structure PrinciplesEasy🔁⭐💡🌟#business finance; financial leverage; debt financing; capital structure; fixed financial charges🎓Midterm; Quiz 1; Past Paper🏛️VU Midterm ACC501 Quiz Past Papers🏛️Solved MCQs with Reference by Students
Which of the following terms refers specifically to the extent to which a firm relies on debt financing in its capital structure?
  1. A.Operating Leverage
  2. B.Financial Leverage
  3. C.Manufacturing Leverage
  4. D.None of the given options