Charm City Electric is a regulated monopoly providing electric services in a large city.Property, plant, and equipment dominate the asset side of the balance sheet.Which of the following is/are true?

Question

Quizplus · Accepted Answer

Charm City Electric, as a regulated monopoly, can rely more on long-term debt than shareholders' equity to finance its property, plant, and equipment. It may also have a high debt-equity ratio of 100% or more. The regulated monopoly status practically eliminates the risk of default or bankruptcy, which means that Charm City Electric faces a relatively low borrowing cost. Additionally, its production and transmission facilities can serve as collateral for the long-term. Therefore, all of the above statements are true.

Charm City Electric Is a Regulated Monopoly Providing Electric Services