Which One of the Following Is Not Implied by the Pecking

question 56

Multiple Choice

Which one of the following is not implied by the pecking order theory?

• A)Profitable firms tend to use less debt than unprofitable firms.
• B)Companies like having financial slack.
• C)Companies prefer to borrow up to the point where the financial distress costs offset the tax benefit of debt.
• D)There is no target debt-equity ratio for a firm.
• E)Firms tend to accumulate cash in anticipation of future projects.

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Definitions:

Transfer to Heirs

The process by which ownership of property or assets is legally passed from a deceased person to their designated inheritors or next of kin.

Metro Delivery

A service focused on the fast and efficient transportation of goods within metropolitan or urban areas.

Franchise Arrangement

A legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business.

Wind Up

Wind Up is the process of concluding the affairs of a business or partnership, including paying off debts and distributing remaining assets to stakeholders.