Easily Identifiable Debt-equity Ratio That Will Maximize The Value Of A Firm

PART SIX Cost of Capital and Long-Term Financial Policy that increasing debt increases the overall risk of the firm and therefore decreases the value of the firm? A: ??

3. Optimal Capital Structure Is there an easily identifiable debt-equity ratio that will maximize the value of a firm? Why or why not?

4. Observed Capital Structures Refer to the observed capital structures given in Table 17.7 of the text. What do you notice about the types of industries with respect to their average debt-equity ratios? Are certain types of industries more likely to be highly leveraged than others? What are some possible reasons for this observed segmentation? Do the operating results and tax history of the firms play a role? How about their future earnings prospects? Explain.

5. Financial Leverage Why is the use of debt financing referred to as financial "leverage"?

6. Homemade Leverage What is homemade leverage?

7. Bankruptcy and Corporate Ethics As mentioned in the text, some firms have filed for bankruptcy because of actual or likely litigation-related losses. Is this a proper use of the bankruptcy process?

8. Bankruptcy and Corporate Ethics Firms sometimes use the threat of a bankruptcy filing to force creditors to renegotiate terms. Critics argue that in such cases, the firm is using bankruptcy laws "as a sword rather than a shield." Is this an ethical tactic?

9. Bankruptcy and Corporate Ethics As mentioned in the text, Continental Airlines filed for bankruptcy, at least in part, as a means of reducing labor costs. Whether this move was ethical, or proper, was hotly debated. Give both sides of the argument.

10. Capital Structure Goal What is the basic goal of financial management with regard to capital structure?

Questions and Problems

Basic

(Questions 1-15)

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Responses

  • anniina
    What do you notice about the types of industries with respect to their average debtequity ratios?
    7 years ago
  • Yonatan
    Is there easyily identifiable debtequity ratio that will maximize the value of a firm?
    7 years ago
  • Adonay Negassi
    Is there an easily identifiable debtequity ratio that will maximize the value of a firm?
    7 years ago
  • RICHARD
    Is there an easily identifiable debt equity ratio?
    7 years ago
  • hanna-mari
    Is there an easily identifiable debtequity ratio that will maxmize the value of a firm?
    7 years ago
  • jasmine
    What are some possible reasons for this observed segmentation?
    7 years ago
  • myrtle
    Do the operating results and tax history of the firms play a role in debt percentage?
    7 years ago
  • SARA
    What are some possibles reasons for observed segmentation?
    7 years ago
  • tancredi greco
    What debtequity ratio maximizes the value of a firm?
    7 years ago
  • johnnie jones
    Is filing for bankruptcy to reduce labor costs ethical or proper?
    7 years ago
  • segan
    What debt to equity ratio that will maximize the value of the firm?
    6 years ago
  • Brhane
    Is there an easily identifiable debt to equity ratio that will maxmimize the value of the firm?
    6 years ago
  • gianna
    Do the tax history of a firm play a role?
    6 years ago
  • kelli white
    Is there and easy debt to income ratio that will maximize the value of a firm?
    8 months ago
  • felix meister
    Is there an easily quantfiable debtequity ratio that will maximize the value of a firm?
    4 months ago

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