Generally,the more stable a firm's operations,the more debt it can handle in its capital structure.

Question

Quizplus · Accepted Answer

This statement is generally true as a firm with stable operations is more likely to have predictable cash flows which can be used to service debt obligations. This makes lenders more willing to lend to the firm and allows the firm to take on more debt in its capital structure. However, it is important to note that there are other factors that also influence a firm's ability to handle debt, such as the level of interest rates, the firm's credit rating, and market conditions.

Generally,the More Stable a Firm's Operations,the More Debt It Can