Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 14, Problem 1PS
Sources of funds True or false?
- a. Net stock issues by U.S. nonfinancial corporations in most years are small but positive.
- b. Most capital investment by U.S. companies is funded by
retained earnings and reinvesteddepreciation. - c. Debt ratios in the United States are lower than in most other developed economies.
Expert Solution & Answer
Summary Introduction
To discuss: Whether the give statements are true or false.
Explanation of Solution
a.
The net stock issues by the nonfinancial companies in country U in majority of the years are neither small nor positive. Thus, the net equity issues are negative, it means that the repurchases of shares are larger than the share issues.
Hence, the given statement is false.
b.
Majority of the capital investments by country U corporations are funded by the depreciation that are invested again and by the retained earnings.
Hence, the given statement is true.
c.
In country U the debt ratios are lower when compared to other developed economies.
Hence, the given statement is true.
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Chapter 14 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
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