The directors of a manufacturing company are thinking of issuing Rs. 20 lacs additional debentures for expansion of their production capacity. This will lead
The directors of a manufacturing company are thinking of issuing Rs. 20 lacs additional debentures for expansion of their production capacity. This will lead to an increase in debt-equity ratio from 2: 1 to 3: 1. What are the risks involved in it? What factors other than risk do you think the directors should keep in view before taking the decision?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
A debttoequity ratio measures the amount of debt a company uses to fund its business for every dollar of equity it has The ratio equals total liabilit...
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Step: 2
Step: 3
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Authors: John Graham, Scott Smart
3rd edition
9781111532611, 1111222282, 1111532613, 978-1111222284
