Which of the following is not an advantage of issuing bonds instead of common stock?
A) Stockholder control is not affected.
B) Earnings per share on common stock may be lower.
C) Income to common shareholders may increase.
D) Tax savings result.

Question

Quizplus · Accepted Answer

Issuing bonds instead of common stock does not dilute ownership or control, which is an advantage. However, since interest on bonds must be paid before earnings are distributed to shareholders, it can lower the earnings per share on common stock, which is not considered an advantage.

Which of the Following Is Not an Advantage of Issuing