Which Statement Is Correct About the Financial Leverage of a Company

question 10

Multiple Choice

Which statement is correct about the financial leverage of a company with an equity base of $400,000?

• A)A company that borrows $150,000 is more leveraged than a company that borrows $250,000.
• B)A company that borrows $250,000 is more leveraged than a company that borrows $150,000.
• C)The return on equity of the company is unaffected by the financial leverage.
• D)The return on equity of the company will be higher if it has a lower leverage.

Recognize the appropriate statistical method to describe and analyze data based on the scale of measurement.

Interpret the results of statistical analysis in research findings.

Understand the concept and calculation of frequency distribution.

Comprehend the significance and application of measures of variability.

---

Definitions:

Service Factor

A measure of service level performance, often used in inventory control to determine the appropriate amount of safety stock to meet a specified service level.

Product Availability

A measure of the extent to which goods or services are ready for sale and can be purchased by consumers.

Online Sales

The process of selling goods and services through the internet, enabling transactions to be completed digitally.

Brick and Mortar

A business or retail outlet that has at least one physical location, as opposed to being online or virtual.