Author Question: Discuss two reasons why a nation might NOT consider a firm's high debt ratio a risky approach to ... (Read 75 times)

renzo156 · **on:** Jul 7, 2018

Discuss two reasons why a nation might NOT consider a firm's high debt ratio a risky approach to international business.

What will be an ideal response?

Question 2

A system of production in which each of a product's components is produced in the location where the cost of producing that component is lowest is called ________ production.

A) rationalized
B) craft
C) job
D) customized

pratush dev · **Reply #1 on:** Jul 7, 2018

Answer to Question 1

The riskiness of debt is perceived differently around the world. The average debt ratio in Germany, Italy, Japan, and numerous developing economies typically exceeds 50 percent. High reliance on debt financing can arise if a country lacks a well-developed stock market or other systems for obtaining capital from equity sources. Under such conditions, firms may have little choice but to borrow money from banks. In other nations, firms maintain close relationships with banks. In Japan, large MNEs are often part of a conglomerate or holding company that includes a bank. Sony Corporation has its own bank, Sony Bank.

Answer to Question 2

A