Which one of the following factors would likely cause a firm to increase its use of debt financing as measured by the debt-to-total-capital ratio?

C. An increase in the price-earnings ratio.

D. An increase in the corporate income tax rate.

It would depend on a number of both internal and external factors, short-term and long- term strategies, goals and obligations and then the type and term of what was chosen. Notwithstanding these unknown factors in the question, the likelihood would be either B or D. With B the increase in leverage would avail the business to expand its credit rating through unanticipated or anticipated debt exposure if the corporate strategy both allowed for and/or instigated it. Higher debt exposure may bring added benefits depending on whether the entity is unilateral in approach or operates on a group or consortia basis. Increased corporate tax may also be the catalyst depending,again, on corporate strategy, outlook, and anticipated gains/losses. Variables may alter this and it may likely be that the tax increase falls under the position of increased leverage (principally in ‘group’-focused entities.

Which one of the following factors would likely cause a firm to increase its use of debt financing as measured by the debt-to-total-capital ratio? An increase in the corporate income tax rate. ( Modigliani–Miller theorem)

The concept of BCC (Blind Carbon Copy) and CC (Carbon Copy) is understood to many, however, what email is visible to what user was an unknown fact fact to me which I recently discovered and am glad sharing it here.

The correct Answer is D: An increase in the corporate income tax rate

D.---------

An increase in the corporate income tax rate.

An increase in the operating leverage