Sanger Machine Company is evaluating its use of debt and equity capital. Some members of the finance team think the company would be better served by issuing new debt and using the proceeds to buy back shares of its common stock. What type of managerial decision is this?

Question

Social Studies

Brooke Ho

3 July, 16:41

Sanger Machine Company is evaluating its use of debt and equity capital. Some members of the finance team think the company would be better served by issuing new debt and using the proceeds to buy back shares of its common stock. What type of managerial decision is this?

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Answers (1)

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Tiffany Frey · Answer 1

capital structure

Explanation:

Capital structure -

It refers to the value of equity plus debt, which is used by the company for their growth and operations, is referred to as capital structure.

The amount of equity comes from the retained earnings and common stock.

Where as,

The amount of debt comes from the loans and bond issues.

Hence, from the given scenario of the question,

The type of managerial decision is capital structure.