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Explain the Following as Factor Affecting 'Financing Decision'. Level of Fixed Operating Cost - Business Studies

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Question

Explain the following as factor affecting 'financing decision'.

Level of fixed operating cost

Solution

Level of fixed operating cost: Fixed operating cost includes salaries, rent, insurance payouts etc. If a firm has low fixed operational cost, it can opt for the debt which involves fixed financing cost in the form of interest obligations, thereby increasing fixed cost.

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Explain the Following as Factor Affecting 'Financing Decision'. Level of Fixed Operating Cost Concept: Financial Decisions - Financing and Dividend.
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