Pecking order theory suggests that managers may use various sources for raising of fund in an order. EXPLAIN the preferred order of financing…

CA Intermediate · Financial Management and Strategic Management · MTP · May 2026
Pecking order theory suggests that managers may use various sources for raising of fund in an order. EXPLAIN the preferred order of financing sources suggested by this theory.

Suggested Answer and Working Notes:

Pecking order theory suggests that managers may use various sources for raising of fund in an order. Managers first choice is to use internal finance.In absence of internal finance, they can use secured debt, unsecured debt, hybrid debt etc.Managers may issue new equity shares as a last option.

Topics: Part-A: Financial Management

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