You are assessing the optimal debt ratio for an oil company, using the cost of capital approach. A key driver of this optimal debt ratio is the operating income that you attribute to this firm. In coming up with an optimal, which of the following measures of operating income will yield the best estimate of optimal debt ratio?

a.

Highest operating income earned over an oil price cycle

b.

Average operating income earned over an oil price cycle

c.

Operating income in the most recent 12 months

d.

Lowest operating income earnings over an oil price cycle

e.

Operating income in the most recent fiscal year