Which the company classifies the preferred shares in equity

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Problem 1: A company issues preferred shares that are mandatorily redeemable, i.e., they must be repurchased by the company after a specified period of time. The company classifies these preferred shares in equity when they should be classified as debt.

a. This classification will lower the debt/equity ratio.
b. This classification will raise the debt/equity ratio.
c. This classification will not affect the debt/equity ratio.
d. Cannot tell based on the information given.

Reference no: EM132976742

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