The trade-off theory suggests that a company should use as much debt in its capital structure as possible,given the tax advantages of the use of debt financing.

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The trade-off theory suggests that a company should use an optimal amount of debt in its capital structure to balance the tax advantages of debt financing with the costs of financial distress and bankruptcy. Using too much debt can lead to increased financial risk and potentially harm a company's financial stability. Therefore, the statement that a company should use as much debt as possible is false according to the trade-off theory.

The Trade-Off Theory Suggests That a Company Should Use as Much