In general, the capital structures of U.S. firms:
A) tend to overweigh debt in relation to equity.
B) generally result in debt-equity ratios between .45 and .55.
C) are fairly standard for all SIC codes.
D) tend to exceed a debt-equity ratio of .45.
E) vary significantly across industries.

Question

Quizplus · Accepted Answer

The capital structures of U.S. firms vary significantly across industries. Some industries, such as utilities and telecommunications, tend to have higher debt levels due to the significant capital investments required to operate in those industries. Other industries, such as technology, tend to have lower debt levels as they rely more on equity financing for growth. Therefore, the capital structures of U.S. firms cannot be considered fairly standard for all SIC codes or tend to exceed a debt-equity ratio of .45.

In General, the Capital Structures of U.S. Firms