Firms with high proportions of intangibles, whether recognized as assets on the balance sheet or not, tend to rely more on
A)equity financing than on long-term debt financing.
B)long-term debt financing than on equity financing.
C)short-term debt financing than on long-term debt financing.
D)long-term debt financing than on short-term debt financing.
E)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

Firms with high proportions of intangibles may not have a lot of physical assets to use as collateral for loans, making it more difficult to obtain long-term debt financing. As a result, these firms may rely more heavily on equity financing, which does not require repayment and does not involve collateral.

Firms with High Proportions of Intangibles, Whether Recognized as Assets