Debt financing:

Multiple Choice

• is one option available to both established and emerging companies.

• is only used by established growth companies because they are able to secure a low interest rate .

• is only used by emerging growth companies with no access to equity capital.

• is always a better choice than equity financing because of the tax deductibility of interest expense.

Condensed financial data are presented below for the Phoenix Corporation:

	2019				2018
Accounts receivable		267,500			$	230,000
Inventory		312,500				257,500
Total current assets		670,000				565,000
Intangible assets		50,000				60,000
Total assets		825,000				695,000
Current liabilities		252,500				200,000
Long-term liabilities		77,500				75,000
Sales		1,640,000
Cost of goods sold		982,500
Interest expense		10,000
Income tax expense		77,500
Net income		127,500
Cash flow from operations		71,000
Cash flow from investing activities		(6,000	)
Cash flow from financing activities		(62,500	)
Tax rate		30	%

The days inventory held for 2019 is (rounded):

Multiple Choice

• 116 days.

• 96 days.

• 106 days.

• 138 days.

Changes in a companys capital expenditures or fixed asset sales over time must:

Multiple Choice

• be indicative of changes in the companys strategy.

• be carefully analyzed for changes in the companys strategy.

• indicate incompetent management.

• raise the companys risk of default on its debt.