Answer to Question #57861 in Finance for abdiaziz
firms want to "window dress" the coming end-of-year financial statements. As part of
the window dressing strategy, each firm will double its current liabilities by adding
short-term debt and placing the funds obtained in the cash account. Describe the actual
results of these transactions.
If a company increases its debt ratio, but leaves its operating income (EBIT) and total assets unchanged, the share of debt will increase without any improvements in other indicators, so the risks will increase.
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