Studies have found that firms with high proportions of intangible assets are likely to use ____________ debt compared with firms with low proportions of intangible assets.
A) more
B) the same amount of
C) less
D) either more or the same amount of
E) any amount of debt

Question

Quizplus · Accepted Answer

Firms with high proportions of intangible assets have a higher risk of defaulting on debt payments as intangible assets like brand reputation, intellectual property, and customer goodwill are difficult to value and cannot be easily sold to repay the debt. Therefore, such firms are likely to use less debt to finance their operations and reduce their default risk.

Studies Have Found That Firms with High Proportions of Intangible