XYZ Corp. manufactures a commodity product in a highly competitive industry in which no company has significant market share and where there are low barriers to entry. Which of the following best describes XYZ’s ability to take on substantial debt?

A. Its ability is very limited because companies in industries with those characteristics generally cannot support high debt loads.

B. Its ability is high because companies in industries with those characteristics generally have high margins and cash flows that can support significant debt.

C. We don’t have enough information to answer the question.