Not all firms have the same optimal capital structure. Factors that might influence a firm's capital structure include:
A) the industry in which it operates.
B) the volatility of its sales and operating income.
C) the collateral value of its assets.
D) all of the above

Question

Quizplus · Accepted Answer

All of the above factors can influence a firm's optimal capital structure. The industry in which a firm operates can affect its access to different types of capital and the level of risk it faces. The volatility of sales and operating income can impact a firm's ability to make debt payments and therefore the level of debt it can carry. The collateral value of assets can affect a lender's willingness to extend credit or the cost of borrowing. Therefore, a firm's optimal capital structure will depend on these and other factors unique to its specific situation.

Not All Firms Have the Same Optimal Capital Structure