Questions from Managerial Finance

Q: What is the general relationship among operating leverage, financial leverage,

What is the general relationship among operating leverage, financial leverage, and the total leverage of the firm? Do these types of leverage complement one another? Why or why not?

Q: What is a firm’s capital structure? What ratios assess the degree

What is a firm’s capital structure? What ratios assess the degree of financial leverage in a firm’s capital structure?

Q: In what ways are the capital structures of U.S.

In what ways are the capital structures of U.S. firms and non–U.S. firms different? How are they similar?

Q: What is the major benefit of debt financing? How does it

What is the major benefit of debt financing? How does it affect the firm’s cost of debt?

Q: What are business risk and financial risk? How does each influence

What are business risk and financial risk? How does each influence the firm’s capital structure decisions?

Q: Your firm has the option of making an investment in new software

Your firm has the option of making an investment in new software that will cost $130,000 today but will save the company money over several years. You estimate that the software will provide the savin...

Q: What two ways can firms distribute cash to shareholders?

What two ways can firms distribute cash to shareholders?

Q: Describe a constant-payout-ratio dividend policy, a regular

Describe a constant-payout-ratio dividend policy, a regular dividend policy, and a low-regular-and-extra dividend policy. What are the effects of these policies?

Q: Why do firms issue stock dividends? Comment on the following statement

Why do firms issue stock dividends? Comment on the following statement: “I have a stock that promises to pay a 20% stock dividend every year, and therefore it guarantees that I will break even in 5 ye...

Q: Compare a stock split with a stock dividend.

Compare a stock split with a stock dividend.