The pecking order theory describes a hierarchy of financing beginning with retained earnings,followed by debt financing,and finally external equity financing.

Question

Quizplus · Accepted Answer

The statement accurately describes the pecking order theory, which suggests that companies prefer to finance their operations with retained earnings first, then with debt financing if needed, and finally with external equity financing if all other options are exhausted.

The Pecking Order Theory Describes a Hierarchy of Financing Beginning