Asked by Justene Hirsig on May 13, 2024
Verified
Leverage implies that a company
A) contains debt financing
B) contains equity financing
C) has a high current ratio
D) has a high earnings per share
Leverage
Using debt to increase the return on an investment.
Debt Financing
Raising funds for business activities by borrowing money, typically through loans or by issuing bonds.
- Absorb the essence of how leverage affects a company's financial framework and its use in generating increased returns on equity.
Verified Answer
AH
Alexandra HernandezMay 15, 2024
Final Answer :
A
Explanation :
Leverage refers to the use of debt financing to increase returns for shareholders. Therefore, a company that contains debt financing would have leverage. Choices B, C, and D are not directly related to leverage.
Learning Objectives
- Absorb the essence of how leverage affects a company's financial framework and its use in generating increased returns on equity.
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