When assessing the fixed-payment coverage ratio, ________
A) the lower its value the more risky is the firm
B) the lower its value, the higher is the firm's financial leverage
C) preferred stock dividend payments can be disregarded
D) the higher its value, lesser is its reliability to pay up the debts
A
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Which of the following assumptions of an ideal (or perfect) capital market most closely relates to the assumed symmetry of information set shared by all firms and all investors?
a. Capital Markets are frictionless b. Homogeneous expectations c. Atomistic competition d. The firm has a fixed investment program e. Once chosen, the firm's financing is fixed
Reducto Co. pays a weekly payroll of $95,000 that includes federal taxes withheld of $12,700, FICA taxes withheld of $7,270, and retirement withholdings of $6,000. What is the effect of assets and liabilities from this transaction?
A) Assets decrease $85,000 and liabilities decrease $25,970. B) Assets decrease $85,000 and liabilities increase $25,970. C) Assets decrease $69,030 and liabilities decrease $25,970. D) Assets decrease $69,030 and liabilities increase $25,970.