Leverage Ratios Measure the Extent to Which a Firm Uses

question 16

Multiple Choice

Leverage ratios measure the extent to which a firm uses _____.

• A) financial leverage
• B) operating leverage
• C) accounting leverage
• D) notional leverage

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Definitions:

Social Discount Rate

The rate used to convert future costs and benefits to their present value in order to make decisions regarding public projects.

NPV Calculations

The process of determining the net present value of cash flows by discounting them to the present value using a specific rate.

Carbon Tax

A tax imposed on carbon dioxide emissions, designed to reduce the use of fossil fuels and lower greenhouse gas emissions.

Stock Dissipation Rate

The rate at which a stock or resource diminishes due to use or other factors.