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Under which of the following situations a company is not likely to issue equity capital?
When the debt service coverage ratio is high.
When the interest coverage ratio is high.
When the cost of debt capital is low.
All of the above
- Option 1: When the debt service coverage ratio is high, it indicates the company can easily meet its debt obligations. It might not need to issue equity capital.
- Option 2: A high interest coverage ratio suggests the company can comfortably pay interest on its debts, reducing the need for equity issuance.
- Option 3: If the cost of debt capital is low, it is cheaper for the company to raise funds through debt rather than issuing new equity.
- Correct Answer: All of the above situations might deter a company from issuing equity capital.
- Correct Answer: Option 4: All of the above
By: santosh ProfileResourcesReport error
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