QUESTION 7 All of the following statements are true except O A firm with too much debt may have difficulty obtaining additional debt financing when needed or finds that credit is available only at extremely high rates of interest. 0 O The amount and proportion of debt in a company's capital structure is extremely important to the financial O Failure to satisfy the fixed charges associated with debt will ultimately result in bankruptcy. Having debt is always risky and does not provide increased benefits to the firm's owners. analyst because of the trade-off between risk and return. QUESTION8 Which of the following statements is true? Cash flow adequacy ratios are generally defined similarly by analysts. OCash used for dividends should be generated by borrowing rather than by generating cash from operations. Companies over the short run should generate enough cash flow from operations to cover investing and financing activities of the firm. Borrowing each year to pay dividends and repay debt is a questionable cycle for a company to be in over the long run