Understanding Pecking Order Theory in Capital Structure

In corporate finance, the Pecking Order Theory suggests that firms prefer to finance themselves in a specific order due to the costs associated with different financing methods. According to this theory, companies prioritize their sources of financing based on the principle of least effort, or from the least expensive to the most expensive form of capital.

Which of the following statements best describes the implications of the Pecking Order Theory regarding a firm's capital structure decisions?