Firms with Tangible Long-Term Assets and Less Predictable Cash Flows

Multiple Choice

Firms with tangible long-term assets and less predictable cash flows, such as auto manufacturers and steel companies, whose sales vary with changes in economic conditions, tend to use

A) a more nearly equal mix of long-term debt and shareholders' equity financing.
B) a greater amount of long-term debt [80%] than shareholders' equity financing [20%].
C) a smaller amount of long-term debt [20%] than shareholders' equity financing [80%].
D) a greater amount of long-term debt [80%] than assets [20%].
E) a greater amount of shareholders' equity [80%] than assets [20%].