The Pecking Order Hypothesis suggests that profitable companies will borrow less (because they have more internal funds available)and may have higher debt-equity ratios because they have more debt capacity.

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The Pecking Order Hypothesis suggests that profitable companies will borrow less due to having more internal funds available, but it does not imply they will have higher debt-equity ratios; instead, they might have lower debt-equity ratios because they rely less on external financing.

The Pecking Order Hypothesis Suggests That Profitable Companies Will Borrow