Which one of the following will increase g*? a. increase in total assets b. increase in the payout ratio c. decrease in corporate tax rates d. increase in debt to asset ratio

When considering the impact of distress costs on capital structure, which of the following facts should lead a company to set a higher target debt ratio than its industry? a. A company has lower total asset turnover ratio. b. A companys bond rating is expected to be lowered. c. A companys cash flows from operations are more volatile. d. A company has maintained better financial flexibility