Question
Regarding the optimal capital structure of a corporation: Even a low debt-to-equity ratio is bad for the company regardless of its specialization (capital incentive company
Regarding the optimal capital structure of a corporation:
Even a low debt-to-equity ratio is bad for the company regardless of its specialization (capital incentive company or services company or technology company) | ||
A high debt-to-equity ratio indicates a higher WACC for the company | ||
A high debt-to-equity ratio leads to increased required rate of returns by investors because the company is receiving more financing by lending money subjecting to risk, and its stocks have a higher risk | ||
A high debt-to-equity ratio indicates that a company is borrowing less capital from the market to fund its operations |
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