Firms Having Stable and Predictable Revenues Can More Safely Employ

question 159

True/False

Firms having stable and predictable revenues can more safely employ highly leveraged capital structures than can firms with volatile patterns of sales revenue.

---

Definitions:

Weighted Average Cost

A calculation that takes into account the varying costs of different sources of capital, weighted by their proportions in the capital structure.

Cost of Equity

The return that investors expect for investing in a company's equity, representing the compensation the market demands in exchange for owning the asset and bearing the risk of ownership.

After-tax Cost

The expense of an investment or operation after accounting for the impact of taxes, reflecting the true cost to the investor or business.