Question

Capital structures vary among firms in the United States and around the world. Relationships, attitudes, tax codes, and accounting differences contribute to some of the differences. As U.S. firms become increasingly involved in worldwide operations, they must become increasingly aware of worldwide conditions, and they must be prepared to adapt to conditions in the various countries in which they do business.
1. Indicate whether each of the following statements about the various capital structures is true or false.
Statements True False
a. The least-leveraged industries have the highest TIE ratios.
b. U.S. firms have more debt and less equity than Germany or Japan.
c. Italy and Japan use more debt than the United States and Canada.
d. Management attitude influences the amount of debt that a firm takes on.

Answer 1

Answer:

a. True

b. False

c. True

d. True

Explanation:

a. True, The least-leveraged industries have the highest TIE ratios.

b. False, U.S. firms have more debt and less equity than Germany or Japan.

c. True, Italy and Japan use more debt than the United States and Canada.

d. True, Management attitude influences the amount of debt that a firm takes on.