Is there relatively little risk in the assets of firms in the industry so firms can carry high proportions of debt financing, as in the case of consumer finance companies? Alternatively, are there high risks resulting from short product life cycles or product liability concerns that dictate low dept and high owners' equity financing?
Is the industry relatively profitable and mature, generating more cash flow from operations than is needed for acquisitions of property, plant, and equipment? Or, is the industry growing rapidly and in need of external financing?