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1. When a portion of the firm’s current assets are financed with long-term liabilities, the firm
A. is using more conservative funding strategy
B. None of the choices are correct
C. is in insolvency
D. has a zero net working capital
E. has a negative net working capital
(Please explain why)
2. Suppose that lil john industries' equity is currently selling for $41 per share and that 2.4 million shares are outstanding. Assume the firm also has 34,000 bonds outstanding, and they are selling at 102 percent of par. What are the firm's capital structure weights?
Equity
Debt
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