Which of the Following Statements Is CORRECT

question 31

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 total debt to total capital 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 total debt to total capital ratio,the lower the risk.

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