As Companies Increase Leverage

question 98

Multiple Choice

As companies increase leverage,

• A)the difference between the return on assets ratio and the return on common shareholders' equity ratio will not change.
• B)the difference between the return on assets ratio and the return on common shareholders' equity ratio will narrow.
• C)the difference between the return on assets ratio and the return on common shareholders' equity ratio will widen.
• D)there will be no difference between the return on assets ratio and the return on common shareholders' equity.

---

Definitions:

Outcome Fairness

The perception that the outcomes of a decision or process are distributed in a manner that is considered equitable and just among all parties involved.

Interactional Justice

The perception of fairness in the interpersonal treatment individuals receive in organizational decision-making processes.

Outcome Fairness

Outcome Fairness is concerned with the fairness of the results of decisions and processes, assessing whether the outcomes are just and equitable among all parties involved.

Voluntary Turnover

The rate at which employees willingly leave their jobs over a certain period.