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problem: Which of the given statements is accurate?

a. Usually, debt-to-total-assets ratios don't vary much among various industries, though they do differ among firms in a given industry.

b. Electric utilities usually have very high common equity ratios as their revenues are more volatile than those of firms in most other industries.

c. Drug companies (prescription, not illegal!) usually have high debt-to-equity ratios as their earnings are very stable and, therefore, they can cover the high interest costs related with high debt levels.

d. Broad variations in capital structures exist both between industries and among individual firms within given industries. Such differences are caused by differing business risks and as well managerial attitudes.

e. As most stocks sell at or very close to their book values, book value capital structures are almost always sufficient for use in estimating firm's costs of capital.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M915790

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