Question

An important aspect of a​ firm's reorganization plan is the recapitalization of the​ firm's capital structure. The goal of restructuring a​ firm's debt includes​ ________. A. reducing the fixedminuspayment obligations B. exchanging equity for debts C. decreasing the times interest earned ratio D. paying off existing debts

Answer 1

A. reducing the fixed-payment obligations

B. exchanging equity for debts

D. paying off existing debts

Step-by-step explanation:

The firm is capitalization from different financing options like equity and debt. Exchanging the one type of financing to other is known as recapitalization of the firm's capital structure.

Exchanging debt with the equity financing reduces the debt of the company. It will result in decrease in the interest expense. It can also pay off debt of the company. Company may get rid off fixed payments obligations.

Answer 2

decreasing the times interest earned ratio

Step-by-step explanation:

Debt restructuring are measures taken by a business to avoid risk of default on an existing loan, or to take advantage of lower interest rates that are available.

Restructuring is usually carried out by businesses that are about to become insolvent.

Times earned ratio measures a firm's ability to pay off loans. It is the earnings set aside to pay for loans.

When the times earned interest ratio is low it means that interest rates are lower, and this eases debt repayment of the company.