Which of the following statements is true regarding debt financing?

Debt financing can create opportunities when managed well because it allows businesses to access capital without relinquishing ownership. By taking on debt, companies can invest in growth projects, expand operations, or purchase equipment that may lead to increased revenue and profits. When managed effectively, the cost of debt can be less than the benefits gained from investments funded by that debt. This balance is crucial, as understanding cash flows and repayment schedules helps a company leverage borrowed money to enhance its market position or improve efficiencies.

In contrast, the idea that debt guarantees company success is misleading since borrowing always carries the risk of failure to repay, which can lead to bankruptcy if not managed appropriately. The notion that debt is rarely used in capital-intensive industries is also inaccurate, as many such industries, like construction or manufacturing, often rely heavily on debt to finance significant capital expenditures. Lastly, the claim that debt financing prevents financial losses overlooks the inherent risks involved in borrowing, such as interest obligations and the potential for declining revenues to impact repayment ability.