Not all industries operate with a high percentage of debt financing, but most operate with a fair amount. On an industry to industry level, versus the intraindustry level we discussed last week, the percentage of debt financing a given industry carries in dependent on their structure. Observationally, more debt would lower the cost of capital, but it also increases risk at disproportionate levels that vary across industries.

The amount of risk generally depends on how capital-intensive the industry is. For example, information services, healthcare products, and pharmaceutical drug industries have routinely low debt financing (within the 10%-20% range (NYU, 2019)) because they are not capital-intensive (NYU, 2019). This means that they do not need to front a large cost to produce their product. Industries that are capital-intensive would be mainly natural resource and manufacturing industries (whom operate in the 50% range on average (NYU, 2019)) as it takes a ton of upfront spending to deliver a result.

For example, a power company may increase debt to pay for a field of wind turbines. This cost would be high, but it is not very risky as there is almost a 100% guarantee that they will see an increased return as the security of the project's operation is practically assured.

The same may not be so easily said for the low debt financing of the software industry, which does not require a financed upfront cost. This is because most of software is labor-intensive, so, the initial capital is not needed and would be unnecessarily risky.

In conclusion, the percentage of average debt financing within a given industry is based on the level of capital risk that industry can practically operate.

NYU. (2019, January). Cost of Capital by Sector (US). Retrieved February 21, 2019, from http:// http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/wacc.htm

Ineed a clear and pinpoint response to this discussion?