Question
5. Consider the following two potential transactions: (i) borrow from a bank; and (ii) use the proceeds from borrowing to pay out dividend. Assume this
5. Consider the following two potential transactions: (i) borrow from a bank; and (ii) use the proceeds from borrowing to pay out dividend. Assume this is an NFA firm. The combination of two financial transactions will
A. reduce the financial leverage (FLEV) and the firm will continue to be an NFA firm.
B. reduce the financial leverage (FLEV) and the firm will switch to an NFO firm.
C. increase the financial leverage (FLEV) and the firm may become be an NFO firm.
D. increase the financial leverage (FLEV) and the firm cannot be an NFA firm anymore.
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Governmental Accounting Auditing And Financial Reporting
Authors: Michele Mark Levine, Todd Buikema
10th Edition
0891250107, 978-0891250104
