All Else the Same, the Financial Leverage of a Firm

question 205

Multiple Choice

All else the same, the financial leverage of a firm will _________________.

• A) Decrease as the debt/equity ratio increases.
• B) Decrease as the firm's retained earnings account grows.
• C) Increase by the amount of equity it issues in a given year.
• D) Decrease if the firm has negative net income.
• E) Decrease as the firm uses debt to fund expansion projects.

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