Ünite Sınavı Soruları

According to the Trade-off Theory of capital structure theories, what does financial distress or bankruptcy costs refrain firms from?

What is the trade off theory of capital structure?

NOPAT/Capital

Which one of the following is the refers to this formula?

1. Agency theory
2. Trade-off theory
3. Optimal capital theory
4. Traditional approach
5. Net operating income approach

Which of the above are among the capital structure theories?

Which of the following theory assumes that the cost of debt, the WACC and the value of the firm is irrespective of financial leverage?

"Bankruptcy risk................."

Which of the following best completes the sentence above?

Who are  the founders of modern capital structure theory?

Given the information below, compute the WACC for XYZ Corporation.

Equity financing = TL 300,000

Cost of equity = 16%

Debt financing = TL 900,000

Cost of debt = 12%

Tax rate = 25%

1. This approach advocates that a firm can boost its value by lowering its WACC, which is possible by increasing financial leverage in its capital structure.
2. In this approach, it is assumed that the cost of debt is always less than the cost of equity and that the increase in the debt ratio does not lead to a change in the risk perception of the investors.
3. Both the cost of debt and equity remain constant no matter how heavily debt capital is induced to the capital structure of the firm.

Which of the capital structure theories is defined above?

What is the definition of equity financing?

.... is an indicator of financial risk and occurs in case of borrowing.

Which one of the following completes the sentence above?

I. Shifts in the demand for the products/ services of the company.

II. Fluctuations in the sales price due to market volatility. 

III. Changes in input costs.

IV. The cost structure of the company

Which of the factors above affects the business risk of a firm?

As more debt is raised, the risk borne by the shareholder’s increases, leading to ...... .

Which of the following completes the sentence above?

Which of the following is not among the other factors that affect the capital structure?

"The value of the firm is measured as................................."

Which of the following best completes the sentence above?

Which of the following terms refers to the likelihood that a company will be unable to meet its debt obligations?

1. Appraisal of the financing sources
2. Evaluation of the sources' risk
3. Examination of the maturity-cost relation of debt
4. Equalization of working capital and assets with liabilities 
5. Estimation of the cost of equity for different capital budget amounts

Which of the above does assessing the target capital structure require?

...............  claims that  firms follow a hierarchy of funds in financing. Firstly, internal funds are exhausted by reinvesting the net income, and in raising external capital, debt is preferred over equity.

How does debt financing work?