Empirical evidence indicates that for distressed firms, higher pre-distress leverage increases the probability of operational actions (e.g., asset restructuring and employee layoffs) and financial actions (e.g., dividend cuts)
This evidence is consistent with the:
a. disciplinary role of debt.
b. wasteful cuts hypothesis.
c. managerial discretion hypothesis.
d. leverage aggressiveness hypothesis.
A
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Two companies, Company A and Company B, issue convertible bonds at par. If Company A uses IFRS and Company B follows U.S. GAAP, the amount Company A records for the debt will be greater than the amount Company B records for the debt.
Answer the following statement true (T) or false (F)
On December 31, Winters Company received a $385 bill for the purchase of supplies in December that it will not pay for until January 15. Winters follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry needed on December 31 to accrue this cost is:
A. Debit Accounts Payable $385; credit Cash $385. B. Debit Accounts Payable $385; credit Supplies $385. C. Debit Supplies Expense $385; credit Cash $385. D. Debit Supplies $385; credit Accounts Payable $385. E. Debit Supplies Expense $385; credit Supplies $385.
The change in total revenue caused by a one-unit change in output is called the
A) marginal profit. B) marginal revenue. C) marginal demand. D) marginal cost.
Which of the following is NOT a critical success factor in locating facilities in the service sector?
a. proximity of competitors b. convenient access for customers c. traffic volumes and patterns d. frequency of government inspections