Revel Company has average daily sales of $5,000, 90% of which are on credit. Receivables are collected 28 days after sales, on average. What is Revel's average accounts receivable balance?
a $ 4,500
b $ 5,000
c $126,000
d $140,000
Why is equity capital generally more expensive than debt financing?
a. Dividends fluctuate more than interest rates.
b. Interest on bonds is a legal obligation.
c. Investors expect to be paid more for exposure to higher risk.
d. Investors have a greater demand for equity investments than for debt investments.
When compared with a debt-to-assets ratio, a debt-to-equity ratio is
A. Unrelated to the debt-to-assets ratio.
B. About the same as the debt-to-assets ratio.
C. Lower than the debt-to-assets ratio.
D. Higher than the debt-to-assets ratio.