Firms in stable industries are advised to keep debt levels very low so that shareholders, rather than creditors, receive the benefits of steady cash flows.

Name: Firms in stable industries are advised to keep debt levels very low so that shareholders, rather than creditors, receive the benefits of steady cash flows.
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Question

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Firms in a stable industry are more apt to use financial leverage (greater proportionate debt) to amplify their earnings per common share.

Firms in Stable Industries Are Advised to Keep Debt Levels