General guidelines for managers regarding capital structure include all of the following except;
A)A firm with healthy profits and very little debt should not borrow more money
B)For most businesses, the optimal capital structure is between 30% and 50% debt
C)Debt levels above 60% create excessive risk and should be avoided
D)All of the above are correct

Question

General guidelines for managers regarding capital structure include all of the following except; ​
A)A firm with healthy profits and very little debt should not borrow more money​
B)For most businesses, the optimal capital structure is between 30% and 50% debt ​
C)Debt levels above 60% create excessive risk and should be avoided
D)All of the above are correct ​

Quizplus · Accepted Answer

Option A is incorrect as healthy profits and little debt may indicate that the firm has a strong capital structure, but there could still be potential benefits to taking on additional debt. The other options, B and C, are both generally accepted guidelines for managers regarding capital structure.

General Guidelines for Managers Regarding Capital Structure Include All of the Following