Which of the following is not a reason for the issuance of long-term liabilities?
A) Debt financing offers an income tax advantage.
B) Debt financing dilutes ownership interest.
C) Debt may be the only available source of funds.
D) Debt financing may have a lower cost.

Question

Quizplus · Accepted Answer

Debt financing does not dilute ownership interest; this is a characteristic of equity financing, where issuing new shares can dilute the ownership percentage of existing shareholders. Debt financing involves borrowing money that must be repaid, but it does not affect the ownership structure of the company.

Which of the Following Is Not a Reason for the Issuance