Final answer:
It is false that acquiring a high amount of debt is advantageous for firms with highly volatile cash flows because the risk of insufficient income to cover debt obligations is increased. The correct option is B.
Step-by-step explanation:
The assertion that acquiring a high amount of debt is advantageous for firms with highly volatile cash flows is false. Firms with volatile cash flows face the risk of not having sufficient income to meet their debt obligations, particularly the scheduled interest payments that come with borrowing from banks or issuing bonds.
Though debt can be advantageous as it allows a firm to maintain control over its operations without being subject to shareholders, it becomes a liability if the company's cash flow is insufficient to cover the recurring financial costs. Therefore, high levels of debt are generally not advisable for such firms.
Hence, Option B is correct.