Financial leverage could mean financing some of a firm's assets with
A) sales revenues. B) private equity capital.
C) retained earnings. D) preferred stock.
D
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The upper-level managers of Brooms International, a 120-year-old broom and mop manufacturing company, realize that their production facility is outdated. Therefore, they know their competitors, with newer production plants, have gained a competitive advantage over their organization. This is an example of an external weakness.
a. True b. False
Major Manuscripts, Inc. is currently operating at maximum capacity. All costs, assets, and current liabilities vary directly with sales. The tax rate and the dividend payout ratio will remain constant. How much additional debt is required if no new equity is raised and sales are projected to increase by 8 percent?
A. -$157 B. -$68 C. $241 D. $348 E. $367