What Does a Financial Leverage Index Greater Than One Indicate

question 9

Multiple Choice

What does a financial leverage index greater than one indicate about a firm?

• A)Return on assets exceeds the return on equity.
• B)Return on equity exceeds the return on assets.
• C)The firm is not employing debt successfully.
• D)The firm does not generate enough funds to cover interest payments.

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Definitions:

Preoperational Thinker

A stage in Piaget's theory of cognitive development where children aged 2-7 years engage in symbolic play and struggle with logic and taking the perspective of others.

Pretend

To act as if something is true when it is not, often as a form of play.

Object Permanence

The understanding that objects continue to exist even when they cannot be observed.

Scheme

A plan or strategy designed with a specific aim or outcome in mind, often outlining steps or methods to achieve it.