The directors of a manufacturing company are thinking of issuing Rs. 20 lacs additional debentures for...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The directors of a manufacturing company are thinking of issuing Rs. 20 lacs additional debentures for expansion of their production capacity. This will lead to an increase in debt-equity ratio from 2: 1 to 3: 1. What are the risks involved in it? What factors other than risk do you think the directors should keep in view before taking the decision? The directors of a manufacturing company are thinking of issuing Rs. 20 lacs additional debentures for expansion of their production capacity. This will lead to an increase in debt-equity ratio from 2: 1 to 3: 1. What are the risks involved in it? What factors other than risk do you think the directors should keep in view before taking the decision?
Expert Answer:
Answer rating: 100% (QA)
A debttoequity ratio measures the amount of debt a company uses to fund its business for every dollar of equity it has The ratio equals total liabilit... View the full answer
Related Book For
Introduction to Corporate Finance What Companies Do
ISBN: 978-1111222284
3rd edition
Authors: John Graham, Scott Smart
Posted Date:
Students also viewed these finance questions
-
Do you think global businesses would be willing to subscribe to a global code of conduct? Explain your answer.
-
What do you think the effect would be if Congress changes the law so that retirement plan contributions are included in taxable income at the time they are made rather than taxing the payment when...
-
Suppose that an investor in a 50 percent tax bracket purchases three soybean futures contracts at a price of $ 5.40 a bushel and closes them out at a price of $ 5.80. What are the after- tax profits...
-
Asset allocation explains a large portion of a portfolio return. However, the implementation issues involved inthe asset allocation process may reduce the efficiency of the asset allocation strategy,...
-
When nations sign the GATT agreement, they bind their tariffs at their current level, or lower. Tariff binding means that they agree not to raise them except under unusual circumstances. Explain how...
-
Distinguish between physical asset markets and financial asset markets.
-
Net present value and net present environmental impact added have a number of similarities and differences. List and explain these. Consider the arguments for and against discounting future...
-
Prepare a cash budget for Atlas Products, Inc., for the first quarter of 2006, based on the following information. The budgeting section of the corporate finance department of Atlas Products has...
-
Locate a favorite speech; record yourself a) naming the speech and speaker, why you chose this speech, and which part of the speech you'll focus on. I chose Malala Yousafzai's Nobel Peace Prize...
-
Helix Company produces costumes used in the television and movie industries. Recently the company received an ongoing order for Samurai robes to be worn in an upcoming Japanese historical action...
-
Figure 1 shows a fictitious neural circuit, which includes parts of 6 neurons: A, B,C,D and the axons of cells E and F. A-D are simple cells with a soma and axon but no dendrites. Cell A makes...
-
Substance A is shiny, conducts electricity well, and melts at 975 C. Substance A is likely a(n): Question 11 1. ionic solid 2. metallic solid 3. molecular solid 4. covalent network solid Substance B...
-
How do evolutionary processes such as speciation and adaptive radiation contribute to the generation of biodiversity, and what are the implications for conservation biology in terms of preserving...
-
Describe public opinion in the U.S. based upon class lecture/PPTs and the text. What are some of the features of public opinion in the U.S.? Do these surprise you? Why or why not? GO TO ONE OF THE...
-
What is the significance of the edge effect in fragmented habitats, and how does it impact biodiversity and species distribution patterns in landscapes undergoing significant anthropogenic changes?
-
The force of interest is defined as follows, 2 8(t) = = t> 0 3(1+t)' By using the above force of interest, answer the following questions:- a. Formulate a(t). b. Determine i3. c. Evaluate the present...
-
A warrant entitles the holder to purchase one (1) common share of Corona Corp. at an exercise price of until Dec. 31,2021 . If the warrant holder exercised the warrant in Nov 2019 when the stock...
-
Show that every group G with identity e and such that x * x = e for all x G is abelian.
-
Suppose an American call option is in the money, so S > X. Demonstrate that the market price of this call (C) cannot be less than the difference between the stock price and the exercise price. That...
-
An Indiana state savings bond can be converted to $100 at maturity six years from purchase. If the state bonds pay 8% annual interest (compounded annually), at what price must the state sell its...
-
You are planning to purchase a building for $40,000, and you have $10,000 to apply as a down payment. You may borrow the remainder under the following terms: a 10-year loan with semiannual repayments...
-
This water jet of \(50 \mathrm{~mm}\) diameter moving at \(30 \mathrm{~m} / \mathrm{s}\) is divided in half by a "splitter" on the stationary flat plate. Calculate the magnitude and direction of the...
-
If the splitter is removed from the plate of Problem 4.75 problem and sidewalls are provided on the plate to keep the flow two dimensional, how will the jet divide after striking the plate? Data From...
-
A conical spray head is shown. The fluid is water and the exit stream is uniform. Evaluate (a) the thickness of the spray sheet at a radius of \(400 \mathrm{~mm}\) and (b) the axial force exerted by...
Study smarter with the SolutionInn App