Which of the following is the most important factor that affects a firm's financing mix?
A)The amount of EPS
B)The amount of operating income
C)The number of shares that are outstanding
D)The predictability of cash flows

Question

Quizplus · Accepted Answer

The predictability of cash flows is the most important factor that affects a firm's financing mix as it determines the ability of the firm to make regular payments on its debt obligations. If a firm has predictable cash flows, it can take on more debt without risking default. On the other hand, if a firm has unpredictable cash flows, it may need to rely more on equity financing to avoid defaulting on its debt. EPS, operating income, and number of shares outstanding are important factors in assessing a firm's financial health, but they are not as critical in determining its financing mix.

Which of the Following Is the Most Important Factor That