All of the following are likely to result in the use of less debt in a company's capital structure EXCEPT
A) desire to maintain financial flexibility.
B) desire to maintain a high credit rating.
C) insufficient internal funds.
D) a decrease in a company's marginal tax rate.

Question

Quizplus · Accepted Answer

Insufficient internal funds would likely lead to a company using more debt in its capital structure, not less, as it seeks external financing to support its operations or growth initiatives. Options A, B, and D are factors that would lead a company to use less debt to avoid financial risk, maintain creditworthiness, or when the tax benefits of debt are reduced, respectively.

All of the Following Are Likely to Result in the Use