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:

Accident Victim

An individual who has suffered injuries or harm due to an unexpected event or incident.

Life Insurance

A contract between an insurer and a policyholder in which the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.

Release Required

A stipulation or condition that necessitates the issuance or freeing of certain documents, information, or properties.

Part of Speech

A category into which words are grouped based on their function in a sentence, such as noun, verb, adjective, etc.