Which of the following statements about capital structure are correct? Select ALL correct answers. Having too little debt may increase the risk of default in repayment. A company should always finance its business using as much debt as possible in order to optimize the capital structure. A company needs to consider the current economic climate when making decisions on debt and equity proportions. Having too much equity may dilute earnings and the value of the original investors.
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"Having too little debt may increase the risk of default in repayment." - This statement is incorrect. Having too little debt does not increase the risk of default. In fact, it's the opposite. Having too much debt increases the risk of default as the company may Show more…
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