A firm should use as much non-financial liability financing as it can if

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Using non-financial liability financing can be a lower cost source of funding for a firm, especially if its risk-adjusted cost of capital is lower than other sources of financing. This can help the firm to reduce its overall financing costs and increase its profitability. However, the use of non-financial liability financing should be balanced with other sources of financing and financial goals of the firm. The other choices listed are not necessarily factors that determine the best choice for a firm's financing strategy. If a firm's risk-adjusted cost of capital is below that of other sources of financing, it would be beneficial for the firm to use as much non-financial liability financing as possible. This would allow the firm to lower its overall cost of capital and potentially increase its profitability. However, if there is an operational linkage involved or if arbitrageurs can easily undo suboptimal choices, this may need to be taken into consideration in the financing decision. Overall, the decision to use non-financial liability financing should be based on a careful analysis of the firm's specific circumstances and financial goals.

A Firm Should Use as Much Non-Financial Liability Financing as It