Homework Clinic

Social Science Clinic => Business => Finance => Topic started by: mimie on Aug 7, 2023

Title: Which statement regarding debt is correct, other things held constant?
Post by: mimie on Aug 7, 2023

Which statement regarding debt is correct, other things held constant?

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If changes in the bankruptcy code make bankruptcy more costly to corporations, then this would likely lead to higher debt ratios for corporations.

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A decrease in the corporate tax rate is likely to encourage a company to use less debt in its capital structure.

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A decrease in the company’s degree of operating leverage is likely to encourage a company to use less debt in its capital structure.

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A decrease in the personal tax rate is likely to decrease the debt ratio of the average corporation.

Title: Which statement regarding debt is correct, other things held constant?
Post by: MajorWaffle on Aug 7, 2023

A decrease in the corporate tax rate is likely to encourage a company to use less debt in its capital structure.