When does the capital of a company increases? A. Drawings Decrease B. Liabilities Decrease C. Revenue Increases D. Interest on capital increases
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- The cost of equity is ________. a.equal to the amount of asset turnover b.the interest associated with debt c.the weighted average cost of capital d.the rate of return required by investors to incentivize them to invest in a companyA company’s ability to earn more on borrowed money than the associated interest cost so that net income increases is called: A. Interest B. A debenture C. Financial leverage D. CovenantsWhy does an increase in the ratio of current assets to total assets decrease both profits and risk as measured by net working capital? How does changes in the ratio of current liabilities to total assets affect profitability and risk?
- What is the primary purpose of computing the cost of capital? a. To determine the market value of the company's shares b. To assess the company's liquidity position c. To evaluate the profitability of investment projects d. To compare the company's performance with industry peersEssay: 1. What are the components of a working capital? Is it important? Why or why not? 2. What is the effect of the Current Ratio to the company’s operation?The cost of equity is ________. Group of answer choices A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover
- If a company sells new shares of stock to raise money, this will result in a ____ to the contributed capital accounts. A.Debit B.CreditAssuming that the net sales and profit remain the same, a company’s return on investment would decrease if the invested capital decreases increase if invested capital increases increase if the invested capital turnover rate increases increase if the invested capital turnover rate decreasesCost of capital refers to: a. The cost of borrowing money from financial institutions b. The cost of equity investments in the stock market c. The overall cost of financing a company's operations d. The cost of producing goods and services
- How do flotation costs affect the cost of capital?Are these costs about the same for each of thethree capital components? How do they change asthe firm raises larger and larger amounts of capital,and how do flotation costs affect the way a company raises capital from year to year?The company cost of capital: measures the return that investors require from the company. is measured using security book values. depends on historical profits and cash flows. O depends on current profits and cash flows.What is the effect of an increase in the cost of capital on the payback period, profitability index and accounting rate of return? Payback period will increase, Profitability will decrease, and Accounting rate of return will increase. Payback period will not change, Profitability will decrease, and Accounting rate of return will not change. Payback period will not change, Profitability will increase, and Accounting rate of return will decrease. Payback period will decrease, Profitability will increase, and Accounting rate of return will decrease.