QUESTION: 65

A deck furniture supply company maintains a large inventory during the summer sales season. One of the PRIMARY benefits of this approach is that the company avoids which of the following costs?

Holding
Opportunity
Order
Stock-out

Answer(s): D

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QUESTION: 66

One of the advantages of raising capital through public offerings is that:

it reduces fluctuations in the price of capital.
it reduces the costs of managing reporting and disclosure.
large amounts of debt and equity can be raised at the risk-free rate.
large amounts of debt and equity can be raised at prevailing rates.

Answer(s): D

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QUESTION: 67

In terms of capital structure, lease financing normally has the same effect as:

investing.
borrowing.
capitalizing.
lending.

Answer(s): B

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QUESTION: 68

One reason for using a sale and lease-back arrangement in lease financing is to:

create an infusion of cash into the company.
benefit from tax advantages from depreciation.
account for income or costs in one period.
eliminate off-balance sheet debt.

Answer(s): A

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QUESTION: 65

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QUESTION: 68

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