Which Statement Is Not Correct About Financial Leverage

question 72

Multiple Choice

Which statement is not correct about financial leverage?

• A)There are many ways to calculate financial leverage.
• B)It represents the relative debt to a company's equity base.
• C)It allows a shareholder to increase their return on equity.
• D)There is only one way to calculate financial leverage.

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Definitions:

Income Tax Impact

The effect of income tax laws on an entity's financial results, including how taxes influence net income or loss.

Negative Goodwill

A situation that occurs when the purchase price of a company is less than the fair value of its identifiable net assets, often reflecting expectations of future losses or challenges.

Consolidated Financial Statements

Consolidated financial statements are financial statements that aggregate the financial position and operational results of a parent company and its subsidiaries, presenting them as one single entity.

Accounting Fees

Charges for professional accounting services, including audit, tax preparation, and consulting.