mthaant yth fei rfmirsm lso:oked for ways to deleverage. The term deleveraging implies
A) avoided equity financing.
B) borrowed money at lower interest rates.
C) bought back their own stock to reduce the stock outstanding.
D) replaced much of the debt in their capital structure with equity.

Question

Quizplus · Accepted Answer

Deleveraging involves reducing the amount of debt in a company's capital structure. The best choice would be to replace much of the debt in their capital structure with equity, as this would effectively lower the company's leverage ratio and reduce its financial risk. Avoiding equity financing (A) would not reduce debt, and borrowing money at lower interest rates (B) may lower interest payments but would still maintain the same level of debt. Buying back their own stock (C) has no direct impact on the company's debt levels.

Mthaant Yth Fei Rfmirsm Lso:oked for Ways to Deleverage