Question

uppose you are conducting a workshop on capital structure decisions and you want to highlight certain key issues lated to capital structure. Your assistant has made a list of points for your session, but he thinks he might have ade some mistakes. eview the list and identify which items are correct. Check all that apply. Workshop Talking Points A decrease in debt financing increases the risk of bankruptcy, and managers are encouraged to invest in high-risk projects. An increase in debt financing beyond a certain point increases the risk of bankruptcy and financial distress. Interest paid on debt is deducted from a firm's pretax income, thus reducing the amount of taxes that it owes. An increase in debt financing increases the taxes that a company owes. In an event of liquidation, creditors will get their claims over a firm's assets before common shareholders.

Answer 1

rate positively ..let me know if you need any clarification..

	Correct options are-
	An increase in debt financing beyond a certain point increases the risk of bankruptcy and financial distress.
	Interest paid on debt is deducted from a firm's pretax income, thus reducing the amount of taxes that it owes
	In an event of liquidation, creditor will get their claims over a firm's assets before common shareholders.