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.

---

Definitions:

Downward Communication

The flow of information from higher levels of a hierarchical organization to lower levels, often containing directives, instructions, and information relevant to job performance.

Downward Communication

A form of organizational communication that flows from higher levels of management to subordinate levels.

Grapevine Communication

Informal information exchange among people in an organization, often involving rumors or unsubstantiated facts.

Downward Communication

Information flow from higher levels of an organization's hierarchy to the lower levels, often involving directives, updates, or feedback.