What are the advantages of operating and capital leases? What are the disadvantages? Why would a company pick one over the other?

Q: What is meant by the term financial leverage?

A: Borrowed Capital: The money which is borrowed by a company from outsiders for a specified period of…

Q: One of the indirect costs of financial distress is having to sell assets at lower than market value.…

A: Indirect costs of financial distress is not the directly present cost in the financial statements…

Q: What the benefits of the DuPont analysis to deconstruct a firms ROE?

A: Duopoint analysis  With the help of the DuPont Analysis, researchers can identify a company's areas…

Q: What about the recapitalization part in the question? Does that not effect total equity

A: Before recapitalization,the unlevered value of the firm is $500,000,000 or $500 million. Unlevered…

Q: Average corporate tax rates Ordinary income in 2017 was taxed subject to the rates shown in the…

A: Pre tax Income Level   $        19,800  $           70,800  $                       302,000  $…

Q: How does a firm evaluate if it has too many or too few current assets vs. its current liabilities?…

A: A firm evaluate if it has too many or too few current assets vs. its current liabilities by…

Q: What is the effect of a company electing the fair value option with respect to an investment that…

A: Equity method: Equity method is the accounting method used for accounting equity investments which…

Q: Why we have to valuate the company?

A: Value of a business refers to the business value. It shows the worth of the business as on a…

Q: Why would a company consider a liability to be a sacrifice for the future growth? Please explain why

A: A company might consider a liability a sacrifice for future growth because it allows for financing…

Q: In the process of determining fair value, the exit price refers to:   Multiple Choice   the amount…

A: Fair value is the exit price. Fair value is the amount that is determined by market participants…

Q: How can sales and lease contracts be effectively structured to align incentives and maximize…

A: The objectives of the seller's profitability and the lessee's value expectations must be balanced in…

Q: Why might a company want to invest in a company rather than buy it outright? Wouldn't they have more…

A: The company want to invest in another company because it believes in maximizing its return over the…

Q: What major concerns should investors consider when making an investment with a syndication?

A: The major concern that the investors results in investment with syndication is given below as,

Q: Why is financial leverage is attractive

A: Introduction : In simple words, financial leverage refers to the process in which a company buys…

Q: Describe a procedure firms can use to establish costs of capital forprojects with differing degrees…

A: Cost of capital is the rate of interest that the company pays to their investors for investing in…

Q: If you're worried about infinite liability, what alternative forms of ownership arrangements for…

A: The Answer

Q: Can a project generate a negative taxable income for an operation firm?

A: A company that reports net income but negative cash from operations is attributable to a bad cash…

Q: Which of the following is NOT one of the benefits of leasing an asset from another company: -

A: The leasing is one of the method through which any asset is received by a person or a company…

Q: Securitization has its upside (primarily liquidity and diversification), but it has its downside as…

A: Securitization is a complex financial process where assets are bundled together and transformed into…

Q: Explain what the companies should do with their profits, conditional to the availability or absence…

A: Profit is the remaining sales after the company has recorded all expenses and is also called income.…

Q: What is the difference between financial leverage and operating leverage

A: Operating leverage: Operating leverage is a sign of how a corporation's costs are organized and is…

Q: Which kind of company ownership is optimal for an upcoming start-up

A: Businesses are anything that creates money via the sale of products or services to clients.

Q: If a company chooses to minimize WACC, what will be the effect on financial flexibility

A: Basic Terms :- Financial flexibility of the firm is the ability of the firm's capital structure to…

Q: what will be the Market Leasing Assumptions with Renewal Probabilities?

A: Market leasing assumption is a very important assumption which is used in calculating the value of…