Concept – Debt to Equity Ratio
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
What does the debt to equity ratio indicate?
What does the debt to equity ratio indicate?
What does the rate of return on the shareholder’s equity specifies?
What is the impact of retiring debt on the ratios given for Red Corp?
What will be decreased right after Yellow Corp.’s issuance?
A document called a bond indenture outlines the specific provisions of a bond issue.
The periodic interest expense equals the amount of debt outstanding during the period multiplied by the stated interest rate.
The book value or outstanding balance of zero-coupon bonds rises as interest is periodically recognized.
Bonds will be sold at a premium if the market interest rate is higher than the stated rate.
The selling price of bonds initially includes the present value of all future cash outflows associated with the obligation.
The amortization of discount on bonds payable leads to interest expense that is lower than the actual cash outflow.