General Semiconductor is a European-based designer and manufacturer of semiconductors.It manufactures semiconductors in fixed-asset intensive plants.The moderate fraction of its total assets that are property, plant, and equipment results from depreciating its technology-intensive manufacturing facilities over periods as short as four years.Which of the following is/are true?
A)General Semiconductor has small long-term debt and debt-equity ratios.
B)General Semiconductor incurs substantial technology risk from product obsolescence, with product life cycles of less than two years.
C)Heavy reliance on debt financing would add financing risk and thereby increase borrowing costs even more.
D)All of the above are true.
E)none of the above

Question

Quizplus · Accepted Answer

General Semiconductor has a moderate fraction of its total assets that are property, plant, and equipment, which means that it has a relatively small amount of long-term debt and debt-equity ratios. Additionally, the company incurs substantial technology risk from product obsolescence, with product life cycles of less than two years. Heavy reliance on debt financing would add financing risk and thereby increase borrowing costs even more.

General Semiconductor Is a European-Based Designer and Manufacturer of Semiconductors