One Implication of the Signaling Theory of Capital Structure Is

question 55

True/False

One implication of the signaling theory of capital structure is that firms should borrow as much as the trade-off theory of capital structure predicts.

---

Definitions:

Cash Receipts

The total amount of money received by a business or organization during a specific period, often documented for accounting purposes.

Cash Management

The practice of managing a company's or individual's cash flow and investments to optimize liquidity and make effective use of cash reserves.

Rational Purchaser

An economic concept describing a consumer who makes buying decisions based on thorough analysis to maximize utility.

Creditworthiness

An assessment of a borrower's ability to repay debts based on their financial history and current financial status.