Which One of the Following Is Not Implied by the Pecking

Multiple Choice

Which one of the following is not implied by the pecking order theory?

A) Profitable firms tend to use less debt than unprofitable firms.
B) Companies like having financial slack.
C) Companies prefer to borrow up to the point where the financial distress costs offset the tax benefit of debt.
D) There is no target debt-equity ratio for a firm.
E) Firms tend to accumulate cash in anticipation of future projects.