Capital structure material signalling-asymmetric information


1) M&M capital structure theories argue that optimal debt is not 0.0 % debt to equity ratio (that is, no debt). Consistent with M&M theories, average long-run debt to equity ratio in many various industries ranges from 23% to 177%. Thus some technology firms, like Microsoft, Google, and Apple, don’t utilize any long-term debt or almost 0.0% LT debt. Describe whether it makes financial sense for such firms to make use of no debt. You would wish to utilize your understanding of capital structure material mainly signalling and asymmetric information theories, in your answers. Your answers should not be more than ten sentences.

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Finance Basics: Capital structure material signalling-asymmetric information
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