Considering impact of distress costs on capital structure

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Reference no: EM131620585

When considering the impact of distress costs on capital structure, which of the following facts should lead ABC Corporation to set a higher target debt ratio than XYZ Corporation (all else equal)?

A. ABC's cash flows from operations are less volatile than XYZ's.

B. ABC is a computer software firm, and XYZ is an electric utility.

C. ABC operates in a more competitive industry than XYZ.

D. ABC's assets have lower resale values than XYZ's assets.a

Reference no: EM131620585

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