Evidence suggests that:

Question

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Evidence suggests that businesses tend to follow the 'trade-off' theory, which posits that companies balance the costs and benefits of debt and equity financing to optimize their capital structure. Additionally, most businesses are financially geared, meaning they use some level of debt to finance their operations. However, it's also observed that few businesses are highly geared, indicating a cautious approach to leveraging to avoid high levels of financial risk.

Evidence Suggests That