Gamestart is selling the properties that used to house its brick and mortar stores, as...
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Gamestart is selling the properties that used to house its brick and mortar stores, as it will rely mostly rely on home delivery for its products in the future. As a result, the companys ratio of fixed to total assets will drop significantly. Discuss how this aforementioned changes will affect the theoretically optimal leverage ratio of Gamestart, relating you discussion to the trade-off theory of capital structure. In my opinion,the ratio of fixed assets to total assets has decreased,you will have less collateral so that creditors will demand higher interest rates, thus the finiancial distress will be increased.While an expert in this app told me the leverage will be higher since the need less properties and financial distress could be lower.So whose point is correct
Gamestart is selling the properties that used to house its brick and mortar
stores, as it will rely mostly rely on home delivery for its products in the
future. As a result, the companys ratio of fixed to total assets will drop
significantly.
Discuss how this aforementioned changes will affect the theoretically optimal leverage ratio of Gamestart, relating you discussion to the trade-off theory of capital structure.
In my opinion,the ratio of fixed assets to total assets has decreased,you will have less collateral so that creditors will demand higher interest rates, thus the finiancial distress will be increased.While an expert in this app told me the leverage will be higher since the need less properties and financial distress could be lower.So whose point is correct
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