The more conservative a firm's management is,the higher the firm's total debt to total capital ratio [measured as (Short-term debt + Long-term debt)/(Debt + Preferred stock + Common equity)] is likely to be.

Question

Quizplus · Accepted Answer

More conservative management tends to be risk-averse and would likely prefer lower levels of debt to minimize financial risk, leading to a lower total debt to total capital ratio.

The More Conservative a Firm's Management Is,the Higher the Firm's