The merged firm would enjoy ___________ debt capacity because the combination of two or more firms provide greater stability to the earnings level.
A)Lower
B)Higher
C)Stable
D)Non of the above

Question

Quizplus · Accepted Answer

The merged firm would have higher debt capacity because the combination of two or more firms typically results in greater stability in earnings, which in turn can support a larger amount of debt. Stability in earnings is viewed positively by creditors, as it suggests that the firm will be more capable of meeting its debt obligations.

The Merged Firm Would Enjoy ___________ Debt Capacity Because the Combination