What three factors are important to consider in determining a target debt to equity ratio?
A) Taxes, asset types, and pecking order and financial slack.
B) Asset types, uncertainty of operating income, and pecking order and financial slack.
C) Taxes, financial slack and pecking order, and uncertainty of operating income.
D) Taxes, asset types, and uncertainty of operating income.

Question

Quizplus · Accepted Answer

Taxes, asset types, and uncertainty of operating income are crucial factors in determining a target debt to equity ratio. Taxes influence the benefit of debt financing through interest deductibility, asset types affect the collateral value and risk profile, and uncertainty of operating income impacts the ability to service debt.

What Three Factors Are Important to Consider in Determining a Target