Which of the following statements is true regarding a company's management of its debt?
A)Companies try to pay off all their debt as quickly as possible.
B)There is no maximum amount of debt a company can borrow.
C)A company will try to replace old debt with new debt to maintain an optimal level of debt.
D)The process of replacing old debt with new debt is called turnover.

Question

Quizplus · Accepted Answer

A company will try to maintain an optimal level of debt, which means it will try to replace old debt with new debt. This is known as debt restructuring or refinancing, not turnover. Companies do not necessarily try to pay off all of their debt as quickly as possible, and there is a maximum amount of debt a company can borrow based on its creditworthiness and ability to repay.

Which of the Following Statements Is True Regarding a Company's