When asked about key factors of debt policy,financial managers commonly mention:
A) the tax advantage of debt.
B) the importance of maintaining their credit rating.
C) financial slack.
D) all of these.

Question

Quizplus · Accepted Answer

Financial managers commonly mention all three factors as key to their debt policy decisions. The tax advantage of debt refers to the fact that interest payments on debt are tax-deductible, while dividend payments on equity are not. Maintaining a good credit rating is important for access to debt markets and for keeping borrowing costs low. Financial slack is the cushion of available funds that a company keeps on hand to address unexpected financial needs or opportunities. All of these factors play a role in determining a company's debt policy.

When Asked About Key Factors of Debt Policy,financial Managers Commonly