Papa Mario's Pizza Company sells common stock. What type of financing are they using?
A)They are using equity financing and the return shareholders earn is fixed.
B)They are using equity financing and the return shareholders earn depends on how profitable the company is.
C)They are using debt financing and the return debt holders earn is fixed.
D)They are using debt financing and the return debt holders earn depends on how profitable the company is.

Question

Quizplus · Accepted Answer

Papa Mario's Pizza Company is using equity financing by selling common stock. The return shareholders earn depends on how profitable the company is, making it variable rather than fixed. Therefore, option B is the correct choice. Option A and C are incorrect because they mention fixed returns, which is not applicable to equity financing. Option D is incorrect because it mentions debt financing, which is not what the question is asking for.

Papa Mario's Pizza Company Sells Common Stock