Question

The decision to issue debt rather than additional shares of stock is an example of;

a. working capital management

b. a net working capital decision

c capital budgeting

d. a controller’s duties

e. the capital structure decision

Answer 1

The decision to issue debt rather than additional shares of stock is an example of :-

Answer :- (e) the capital structure decision

Explanation :-

Capital structure decision is the decision related to how to finance the capital of the business .

In capital structure decision , it is decided how to arrange the funds , how much debt or equity is to be issued .

So, issuing more debt rather than additional shares is capital structure decision

Explanation for rejection of other points :-

Working capital management and net working capital decision is related to the current assets and current liabilities of the business which means how to finance the current assets and how to manage cash, account receivable , inventory .

Capital budgeting is long term investment decision which is related to investing the funds into long term project.

Controller is responsible for accounting duties .

So , (e) capital structure decision is right answer.