Capital rationing is generally a positive action for a firm because it prevents rapid growth, which can drive up the cost of capital.
Capital rationing is used for "macromanagement" purposes, including debt constraints or economic concerns. It is generally considered a negative action since it can impede achieving maximum profitability.

Question

Quizplus · Accepted Answer

The statement in the question is contradictory. The first sentence suggests that capital rationing is positive, while the second sentence suggests it is negative. Therefore, neither option A or B can be uniformly correct. It is important to evaluate the specific circumstances and goals of the firm when deciding whether capital rationing is appropriate.

Capital Rationing Is Generally a Positive Action for a Firm