The Pecking Order Theory Identifies Two Rules

question 15

Multiple Choice

The pecking order theory identifies two rules.The first rule is to

• A)issue convertible debt prior to straight debt to save funds.
• B)use short-term debt to its maximum available limit prior to issuing long-term debt.
• C)issue new equity first in order to retain internal funds and avoid interest costs.
• D)issue new debt prior to new equity.
• E)use internal financing prior to external financing.

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Definitions:

Organizational

Pertaining to the structure and function of an organization or the process of organizing.

Human Capital

The combined abilities, expertise, or non-material assets possessed by people, which can generate economic benefits for the person, their place of work, or their community.

Organizational Trends

Patterns or movements observed within the realm of organizations, affecting structure, culture, technology, or management practices over time.

Non-Profit Organizations

Organizations established for purposes other than making a profit, focusing on social, educational, or humanitarian objectives.