Which of the following statements is correct? a. Generally, debt ratios do not v

Question

Which of the following statements is correct? a. Generally, debt ratios do not vary much among different industries, although they do vary among firms within a given industry b. Electric utilities generally have very high common equity ratios because their revenues are more volatile than those of firms in most other industries c. Airline companies tend to have very volatile earnings, and as a result they generally have high target debt-to-equity ratios d. Wide variations in capital structures exist both between industries and among individual firms within given industries. These differences are caused by differing business risks and also managerial attitudes e. Since most stocks sell at or very close to their book values, book value capital structures are typically adequate for use in estimating firms' weighted average costs of capital

Explanation / Answer

Option D is correct.
Wide variations in capital structures exist both between industries and among individual firms within given industries. These differences are caused by differing business risks and also managerial attitudes

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