Which of the Following Statements Is CORRECT

question 18

Multiple Choice

Which of the following statements is CORRECT?

• A) Other things held constant, the more debt a firm uses, the higher its operating margin will be.
• B) Debt management ratios show the extent to which a firm's managers are attempting to magnify returns on owners' capital through the use of financial leverage.
• C) Other things held constant, the more debt a firm uses, the higher its profit margin will be.
• D) Other things held constant, the higher a firm's debt ratio, the higher its TIE ratio will be.
• E) Debt management ratios show the extent to which a firm's managers are attempting to reduce risk through the use of financial leverage. The higher the debt ratio, the lower the risk.

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Definitions:

Genus

A class or group of entities that share common characteristics, often used in biological classification to denote a category above species and below family.

American Cities

Urban areas within the United States, governed by local administrations and holding significant cultural, economic, and political importance.

Midwestern American Cities

Urban areas located in the Midwestern region of the United States, known for their diverse industries, cultural heritage, and historical significance.

Genus

In biology, a way to group together species that are closely related, showing the common attributes shared by the species within it.