Final answer:
Acquiring a high amount of debt is not advantageous for firms with highly volatile cash flows.
Step-by-step explanation:
Acquiring a high amount of debt is not advantageous for firms that have highly volatile cash flows. When a firm has highly volatile cash flows, it means that its revenue and cash flow levels fluctuate dramatically, making it difficult to meet the scheduled interest payments on the debt. In such cases, the firm may face the risk of defaulting on its debt and experiencing financial distress.
Firms with stable and predictable cash flows are better suited for taking on higher levels of debt, as they have a consistent source of income to cover the interest payments and debt obligations.