Some large successful companies hold long term debt permanently.Question 3Select one:TrueFalse

Answering the Question

This question pertains to the concepts of corporate finance and capital structure. Companies may indeed hold long-term debt on their balance sheets for extended periods, and it can be a strategic choice based on various factors.

1. Understanding Long-term Debt: Large successful companies often have the capability to issue long-term debt instruments, such as bonds, to raise capital.

2. Strategic Financial Management: Holding long-term debt permanently can be part of a company's financing strategy. For example, it allows companies to lock in lower interest rates over a long period, maintain operational liquidity, and optimize their capital structure.

3. Leverage and Tax Benefits: Long-term debt can provide leverage, which can enhance returns on equity. Additionally, interest payments on this debt may be tax-deductible, further incentivizing companies to maintain debt levels.

In summary, the statement that some large successful companies hold long-term debt permanently is True. Companies may choose to do this as part of their overall financial strategy to improve liquidity, manage interest expenses, and enhance shareholder value.