Positive Financial Leverage Occurs in Which of the Following Situations

question 107

Multiple Choice

Positive financial leverage occurs in which of the following situations?

• A) The company's after-tax return on total assets is less than the after-tax cost of borrowing.
• B) Payment of resources to creditors is limited to the required interest payments while the return of the principal borrowed is not required.
• C) The return to the owners is enhanced through the use of debt financing.
• D) Interest payments can be deducted for income tax purposes.

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Definitions:

Analog Output

An electrical signal that represents a continuous physical quantity, used in control systems to drive or modulate external devices.

Electrical Isolation

A technique of preventing direct electrical current flow between two parts of an electrical system, often achieved through the use of optoisolators or transformers, to protect against surges and interference.

Points per Module

The number of inputs or outputs that a single module in a modular system, such as a PLC, can handle or support.