Rajan and Zingales ["What Do We Know About Capital Structure

question 58

Multiple Choice

Rajan and Zingales ["What Do We Know about Capital Structure? Some Evidence from International Data," 1995] found that leverage decreases with ______.

• A) the tangibility of the firm's assets
• B) profitability
• C) firm size
• D) All of the above are associated with higher leverage
• E) None of the above are associated with higher leverage

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Definitions:

Capital Intensity Ratio

A measure of the amount of capital needed per dollar of revenue, indicating the investment required for a company to maintain its current level of production.

Full Capacity

The maximum level of output that a company can sustain over a period of time without increasing the production resources.

Long-term Debt

Borrowings or financial obligations that are due for repayment over a period longer than one year.

Capital Intensity Ratio

A financial measure that indicates the amount of assets or capital required to generate a dollar of revenue, illustrating the capital efficiency of a company.