Financial Management: Principles and Applications, 13/e

Study Questions

1. 15–1. In Regardless of Your Major: Capital Structure Matters to You! on page 484, we learned about the dangers of using a high proportion of debt financing faced by both General Motors (GM) and Lehman Brothers. How could the failure of these firms possibly matter to you personally or to your parents?

2. 15–2. How does a firm’s financial structure differ from its capital structure?

3. 15–3. What are non-interest-bearing liabilities? Give some examples. Why are non- interest-bearing liabilities not included in the firm’s capital structure?

4. 15–4. What is financial leverage? What is meant by the use of the terms favorable and unfavorable with regard to financial leverage?

5. 15–5. What is the significance of the notion that a firm’s financing ...