1) The target capital structure is the desired optimal mix of debt and equity financing
that most firms attempt to achieve and maintain.
2) The conversion feature, which can be part of either a bond or preferred stock, permits
a firm to raise additional funds at some point in the future by selling common stock,
thereby shifting the company’s capital structure to a less highly levered position.
3) As the typical cash budget shows cash flows on a monthly basis, the information
provided by the cash budget is adequate for ensuring solvency.
4) A strategic merger is a merger transaction undertaken with the goal of restructuring
the acquired company in order to improve its cash flow and unlock its hidden value.