Answered: S1 Sufficient working capital is needed…

S1 Sufficient working capital is needed to prevent business from becoming insolvent S2 Preference shares is a source of short term finance both are true both are false only S1 is true only S2 is true

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: None

A: Step 1:a) The greatest price a decision-maker would be prepared to pay to have complete knowledge of…

Q: In the absence of market imperfections and taxes, stock repurchases are same as cash dividends. How…

A: Two common ways companies distribute profits to their shareholders are through cash dividends and…

Q: [S1] Share warrants are often attached to debt instruments to entice creditors to also become…

A: Detachable warrants can be removed by the holder and sold separately on the secondary market. They…

Q: When a dividend has been declared , it becomes a liability of the firm and can not be recinded…

A: Dividend payments are distribution of profits or earnings by a company to its shareholders. The…

Q: Which of the following statement about capital structure is INCORRECT? O With financial distress,…

A: Let's go through each statement to understand why the others are correct:Capital structure should be…

Q: Within Corporation, one key value of limited liability is that it lowers owners' risks and thereby…

A: 1. owners risk is limited to the amount he invest and because of this the limited liability company…

Q: True or false According to the pecking order theory of capital structure firms should never issue…

A: Capital structure is the combination of different sources of finance for the company's assets.…

Q: Once established, dividends cuts are hard to make without adversely affecting a firm’s stock price.…

A: Dividends are payments that a company makes to its shareholders or stockholders. Essentially…

Q: Generally, managers of corporations prefer internally generated cash to finance their capital…

A: The preferences of corporate managers when it comes to financing capital expenditures

Q: Assume we are in a M&M frictionless world EXCEPT that we have bankruptcy costs only. Under these…

A: In the Modigliani and Miller (M&M) propositions without taxes and other frictions, capital…

Q: QUESTION 53 As Fis consolidate and expand their range of financial services, customer relationships…

A: True. It is important for a firm to maintain customer relationships with commercial entities when it…

Q: True or False Statement 1. A reason that companies tend to favor distributing excess cash as…

A: False. The statement is partially correct, as dividends are often taxed at a lower rate than gains…

Q: Regardless of the situation, no well-managed firm would borrow money to pay dividends to…

A: Corporations pay dividends out of the earnings to the shareholders as compensation for the funds…

Q: Question 1 Stock price never reacts to the unanticipated changes in the dividend. As it has no…

A: The question is related to Dividend Policy.

Q: Which of the following is Correct? Cash dividend has no impact on the market value of the company.…

A: Stock also known as equity or shares represents ownership in a corporation. Stock is a type of…

Q: Pari, a financial advisor, emphasizes to his clients the importance of asset allocation in…

A: Asset allocation is an investment strategy that involves dividing an investment portfolio among…

Q: In what way does paying off a liability impact stockholder's equity? negatively positively no…

A: The financial statements of the business are classified as balance sheet, income statement and cash…

Q: 34. The concept of optimum capital structure is based on the assumption that the prudent use of debt…

A: The statement is True. The concept of optimum capital structure is indeed based on the assumption…

Q: are riskier than th are re les risky than of the listed iter as a met

A: Introduction: Corporate bonds as the name indicates are the debts that are issued by the companies…

Q: 2.322Both investors and companies employ leverage (borrowed capital) whenattempting to generate…

A: Advice to Prevent Collapse1. Reduce Leverage: By lowering the leverage ratio, Lehman Brothers might…

Q: stock markets protect a firms shares from liquidity? true or false

A: Stock markets are said to be amongst the foremost vital components of a free-market economy where…

Q: (a) Explain as best you can what is the Equity Premium Puzzle. (b) Explain as best you can what is…

A: Equity premium or the equity risk premium is the difference between the returns provided by the…

Q: QUESTION 40 The early unwinding of an arbitrage position will be most attractive when OA The initial…

A: We shall answer the first question since the exact question wasn't specified.Please resubmit a new…

Q: Because the types of cash flows that an equity holder receives are fixed and cannot be changed by…

A: False. Equity returns are not guaranteed. The types of cash flows that an equity holder receives,…

Question

S1 Sufficient working capital is needed to prevent business from becoming insolvent

S2 Preference shares is a source of short term finance

both are true

both are false

only S1 is true

only S2 is true

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

company value is not correct, C2 new share price and shares sold are not correct
3
When a firm has less current assets to pay off its current liabilities, it has ______ liquidity risk. Such a firm is likely to have _____ returns. Question 32 options: 1) lower, higher 2) lower, lower 3) higher, higher 4) higher, lower
am. 375.
Attempt in Progress Your answer is incorrect. If a company has trading securities, it will report unrealized changes in their value O only when sold. O directly in shareholders' equity. O as part of income. O on the income statement only if there is a loss. eTextbook and Media Save for Later Attempts: 1 of 2 used Submit Ans %24 % 4. 5 7 8 9 t y u f h k
QUESTION 9 If markets are semi-strong efficient, which of the following situations is most likely to yield abnormal returns? O 1. Following the advice of your stockbroker's newsletter O 2. Identifying a pattern in a company's historical stock price O 3. Obtaining insider information Analysing a company's earning report
Q2. Many corporations do not pay dividends, why are investors willing to by their stock?
Question 1 LBO funds exit their investments primarily through the IPO process. O True O False
4 Which of the following is TRUE? Select one alternative O If all companies in an industry do not hedge, a company in the industry can reduce its risk by hedging. O If all companies in an industry do not hedge, a company is liable increase its risk by hedging. O Hedging can always be done more easily by a company's shareholders than by the company itself. O If all companies in an industry hedge, a company in the industry can sometimes reduce its risk by choosing not to hedge. Reset Maximum marks: