Taggart Technologies is considering issuing new common stock and using the proceeds to reduce its outstanding debt. The stock issue would have no effect on total assets, the interest rate Taggart pays, EBIT, or the tax rate. Which of the following is likely to occur if the company goes ahead with the stock issue?
A. The ROA will decline.
B. Taxable income will decline.
C. The tax bill will increase.
D. Net income will decrease.
E. The times-interest-earned ratio will decrease.
Answer: C
You might also like to view...
Cheyenne is the manager of a local small hotel. Just today Cheyenne received word that a major convention will be coming to town next month, and the demand for hotel rooms is expected to skyrocket. In a conversation with the owner, she asked, "What should our approach to pricing be for the week of the convention? Should we require payment in full at the time of the reservation?" Which management method is Cheyenne using?
A. the devil's advocate method B. scientific management C. the synergy method D. the contingency viewpoint E. the diversity viewpoint
Which of the following is a risk that a company faces when it outsources its operations?
a. The third-party provider may not have the degree of expertise that the outsourcing company has. b. The cost of labor for the outsourcing company may decline. c. If the outsourcing operation is too profitable, the outsourcing company may want to acquire the third-party provider. d. If the outsourcing operation is too successful, the third-party provider may want to acquire the outsourcing company.
The Magnuson-Moss Warranty Act does not require a seller or lessor to make an express written warranty
Indicate whether the statement is true or false
McDonald’s restaurants responded to customer dissatisfaction in the early 2000s by?
a. Incorporating healthier meal options and remodeling restaurants b. Closing restaurants in some areas c. Increasing portion size d. Decreasing availability of some breakfast items