What does it mean when an entity uses leverage to finance itself? What are the advantages and disadvantages of using leverage?
Answer to relevant QuestionsExplain why it's difficult to finance a new business by using a large amount of debt. What concerns would a lender have if they were asked to provide a loan that would represent 90 percent of the company's financing? Explain why not-for-profit organizations don't have an owners' equity section on their balance sheets. What do they have instead? What does that section of the balance sheet represent? How should it be interpreted? What is accumulated other comprehensive income (AOCI)? Where does it appear in the balance sheet? What causes it to change in a period? Would you rather receive a cash dividend or a stock dividend from a corporation? Explain.Corporations disclose the number of shares authorized and the number of shares outstanding. Explain what these terms mean.
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