Mr. Webster, the CEO of Master Works, Inc., recently stated that the ﬁrm will maintain its current policy of borrowing $.40 for every $1 invested by shareholders. Mr. Webster was referring to the
_____ policy of the ﬁrm.
A) Capital budgeting.
B) Working capital.
C) Capital structure.
D) Capital investment.
E) Financial planning.

Question

Quizplus · Accepted Answer

The statement by Mr. Webster relates to the capital structure policy of the firm, which refers to the mix of debt and equity financing used by the company to fund its operations and investments. This policy determines the overall leverage of the firm and affects its financial risk and cost of capital.

Mr Webster, the CEO of Master Works, Inc