Question

which of the following is not an external source of financing for publicly - owned companies?

retained earnings

common shares

long - term debt

preferred shares

question 25
1 pts

why are capital projects critical to a company?

they change the financial structure of a company

they involve the purchase of a current asset

they change the capital structure of a company

they involve the purchase of a capital asset

Explanation:

• For the first question:
• Retained earnings are an internal source of financing as they are the portion of a company's net income that is kept by the company rather than distributed as dividends.
• Common shares, long - term debt, and preferred shares are external sources as they involve obtaining funds from outside the company (e.g., from investors for shares or from lenders for debt).
• For the second question:
• Capital projects involve the purchase of capital assets (such as buildings, machinery, etc.). These assets are long - term in nature and are crucial for a company's operations, growth, and competitiveness.
• Changing the financial structure is more related to how a company finances its operations (e.g., debt - equity mix). Capital projects may affect the financial structure indirectly but their main characteristic is the purchase of capital assets.
• Current assets are short - term (e.g., inventory, cash), and capital projects are not about current assets. Changing the capital structure (which is about the mix of debt and equity in a company's long - term financing) is not the core of what makes capital projects critical.

Answer:

• First question: Retained earnings.
• Second question: They involve the purchase of a capital asset.