Identify the Statement That Is Incorrect

question 166

Multiple Choice

Identify the statement that is incorrect.

• A)Higher financial leverage involves higher risk.
• B)Risk is higher if a company has more liabilities.
• C)Risk is higher if a company has higher assets.
• D)The debt ratio is one measure of financial risk.
• E)Lower financial leverage involves lower risk.

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Definitions:

Foreign Exchange Loss

A loss that occurs when the value of a foreign currency declines in relation to the domestic currency, affecting transactions involving foreign currencies.

Merchandise

Goods that are bought and sold by businesses in the normal course of operations.

Foreign Exchange Loss

A decrease in domestic currency value resulting from transactions denominated in a foreign currency, often due to fluctuating exchange rates.

Ruble Receivable

An amount expected to be received denominated in Russian Rubles, typically from transactions or contracts.