There are several industries with low percentages of debt financing. Take a look and identify some with a low percentage of debt financing and do the same with firms that have a high percentage of debt financing (the average according to the data in the link is about 42 percent).

Do not use the banking financial services industries.

• Based on the types of firms that use a small amount of debt and those that use higher amounts of debt, what can you conclude?
• What is it about the firms that use low amounts of debt?
• More debt would lower their cost of capital so what is holding these firms back from taking on more debt?

You need to think a little. Do not simply say the firms with low debt are all in industry X or industries similar to X; that is obvious. What is the economic intuition? What is the story?