Leverage Is Essential to a Bank's Profitability, but It Also

question 5

True/False

Leverage is essential to a bank's profitability, but it also increases risk.

---

Definitions:

Direct Materials

Raw materials that can be physically and directly associated with the manufacturing of finished goods.

Depreciation

The method of allocating the cost of a tangible asset over its useful life.

Office Equipment

Tangible assets used in an office such as computers, printers, and desks, essential for day-to-day operations.

Selling and Administrative Expense

Expenses related to the selling of products and the general administrative functions of a company, which do not directly contribute to the production of goods.