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is Question 1 2 pts Which of the following statements is TRUE about sources of finance used by companies: Small and medium-sizes companies cannot easily afford the costs of obtaining a public listing on the Stock Exchange Share issue (equity) is considered an internal source of finance for the company as the shareholder become owners. Retained earnings area long-term external source of finance available for the company. Interest and dividend payments on debt and equity are tax- deductible

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is
Question 1	2 pts
Which of the following statements is TRUE about sources
of finance used by companies:
Small and medium-sizes companies cannot easily afford the
costs of obtaining a public listing on the Stock Exchange
Share issue (equity) is considered an internal source of finance
for the company as the shareholder become owners.
Retained earnings area long-term external source of finance
available for the company.
Interest and dividend payments on debt and equity are tax-
deductible

is Question 1 2 pts Which of the following statements is TRUE about sources of finance used by companies: Small and medium-sizes companies cannot easily afford the costs of obtaining a public listing on the Stock Exchange Share issue (equity) is considered an internal source of finance for the company as the shareholder become owners. Retained earnings area long-term external source of finance available for the company. Interest and dividend payments on debt and equity are tax- deductible

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YosefMaster · Tutor for 5 years

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Answer:<br /><br />Explanation: Let's break this down step by step as you taught us:<br />1. Small and medium-sized companies not being able to easily afford the costs of obtaining a public listing on the Stock Exchange - This is in general true. Capital markets possess some barriers in regard to costs and regulations which may put obstacles for smaller firms to engage in a public listing.<br /><br />2. Considering share issue (equity) as an internal source of finance - This statement is false. Issuing share capital is classified as an external source of funding considering the company acquires funds from external shareholders - thereby the shareholders aren't simultaneously proprietors per say, they possess ownership rights.<br /><br />3. Classification of retained earnings as a long-term external source of finance - This is false. Retained earnings refer to profit not distributed as dividends but retained in the company. Therefore, they are internal sources of finance, not external.<br /><br />4. Dividend payments on debt and equity are tax-deductible - This also isn't accurate. In fact, it is the interest on debt (loan, debentures) that can be tax-deductible but dividends on shares (equity) are not.<br /><br />Answer: The only true statement among the given options is that small and medium-sized companies cannot easily afford the costs of obtaining a public listing on the Stock Exchange.
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