Sources of finance

An EBIT-EPS indifference analysis chart is used for           

• evaluating the effects of business risk on EPS.

• examining EPS results for alternative financing plans at varying EBIT levels.

• determining the impact of a change in sales on EBIT.

• showing the changes in EPS quality over time.

EBIT is usually the same thing as:

• funds provided by operations.

• 
  

  earnings before taxes.

• net income.

• operating profit.

What are the components of capital structure?

• Debt and Equity

• Debts, Preferred stock and Equity 

• Debts, revenue and equity 

• All of the above 

What is Capital Structure? 

• A balance between the assets and liabilities of the firm

• A balance between the revenue and expenditure of the firm

• A distribution of equity and debt that structures the finances of the company.

• All of the above 

Funds raised through loans or borrowings are

• Borrowed funds

• Owners equity

• Share capital

• None of these

Equity shareholders are called _____.

• Owners of the company

• Partners of the company

• Executives of the company

• Guardian of the company

Debentures represent ______.

• Fixed capital of the company

• Permanent capital of the company

• Fluctuating capital of the company

• Loan capital of the company

One advantage of a financial lease is that

• it has a shorter maturity than term loans.

• it never appears as a liability on the balance sheet.

• it eliminate the needs to make periodic payments.

• it provides a way to indirectly depreciate land.

The user of a leased asset is referred to as the:

• Vendor

• Purchaser

• Lessee

• Lessor

The cost in the process of raising funds through equity is known as...

• Flotation cost

• Cost of capital

• Cost of debt

• Financial risk