Question
A company wishes to invest in its long-term future growth by buying $100,000 of new manufacturing equipment. Which of the following financing techniques should the
A company wishes to invest in its long-term future growth by buying $100,000 of new manufacturing equipment. Which of the following financing techniques should the company NOT employ in order to pay for the new equipment?
Secure a 6 month note payable at a local bank.
Use internally generated cash on hand (retained earnings).
Sell new shares of the companys common stock to investors.
Sell 20-year bonds payable.
b.
When the Bad Debt Percentage is calculated, what does management want the percentage to be:
As large as possible because that indicates how much sales has increased from last year. |
As small as possible because that suggests that most accounts receivable balances are collectible. |
None are correct. |
Management does not care about the size of the percentage. |
c.
Which of the following ratios helps predict a companys ability to pay its near-term liabilities?
Days Payable Outstanding |
Dividend Payout Ratio |
Current Ratio |
Operating Profit Margin |
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