First Communications Group is a communication services firm whose employees provide advertising, market research, public relations, and other services world-wide.Other than relatively small amounts of equipment, it owns virtually no property, plant, and equipment (it leases most of its office space).Which of the following is/are true?
A)First Communications Group has a low fixed asset intensity.
B)First Communications Group has a low debt-equity ratio.
C)First Communications Group creates value from employees' services, not from operating assets, so there is neither the need nor the ability to borrow long-term using property, plant, and equipment as collateral.
D)all of the above are true
E)none of the above

Question

Quizplus · Accepted Answer

- A) First Communications Group has a low fixed asset intensity because it owns virtually no property, plant, and equipment.
- B) Since there is no mention of the company's debt levels, we cannot determine whether or not it has a low debt-equity ratio.
- C) First Communications Group's value comes from services provided by employees, not from operating assets. Therefore, there is neither the need nor the ability to borrow long-term using property, plant, and equipment as collateral.

First Communications Group Is a Communication Services Firm Whose Employees