A Company That Is Highly Leveraged Is One That

question 84

Multiple Choice

A company that is highly leveraged is one that

• A)has a high earnings per share.
• B)contains debt financing.
• C)contains equity financing.
• D)has a high current ratio.

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Definitions:

Carrying Cost

The total cost of holding a particular inventory, including storage, insurance, depreciation, and opportunity costs.

Variable Cost

Costs that change in proportion to the level of goods or services produced by a business.

Accounts Receivable Approach

The accounts receivable approach is a method used in financial analysis to estimate the impact of credit sales and receivables on a company's cash flow and profitability.

Net Present Value

Net present value (NPV) is a financial metric that calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.