In the low earnings period, too much ________ in the capital structure of an organization can endanger stockholders' return and jeopardize company survival.
A) debt
B) liquidity
C) equity
D) cash
E) tax liability

Question

Quizplus · Accepted Answer

During a period of low earnings, if a company has too much debt in its capital structure, it may struggle to meet its interest and principal payments. This can result in a lower return for stockholders and potentially even bankruptcy for the company. Therefore, excessive debt can jeopardize both stockholder returns and company survival during a low earnings period.

In the Low Earnings Period, Too Much ________ in the Capital