Question

Solvency ratios measure a company’s ability to meet its debt obligations. True or False

Franchise rights are considered to be an identifiable intangible asset and must be amortized. True or False

Companies that have property, plant, and equipment that increase in market value should recognize a gain on the income statement in the period the increase in value occurs. True or False

All else being equal, a higher financial leverage will increase a company’s debt rating and decrease the interest rate it must pay. True or False

Answer 1

Question Solvency ratios measure a company’s ability to meet its debt obligations

Answer : True

solveny ration included the debt equity ratio and other which will show the companys efficiency to meet company debt repayment ability

Question Franchise rights are considered to be an identifiable intangible asset and must be amortized.

Answer : True

Like other intangible assets if the franchise right at a lump sum ammount it must be amortised over the period of its life of licence .

Question :Companies that have property, plant, and equipment that increase in market value should recognize a gain on the income statement in the period the increase in value occurs.

Answer : True

the compnay should recognised loss or in the income statement in the same period it will occurs

Question :All else being equal, a higher financial leverage will increase a company’s debt rating and decrease the interest rate it must pay.

Answer : True

HIgher financial leverage will increase the risk of defalut in payment and it will increase the cost of borrowing