Which One of the Following Is FALSE

question 31

Multiple Choice

Which one of the following is FALSE?

• A)A high leverage ratio increases ROE.
• B)A low leverage ratio decreases the risk of bankruptcy.
• C)A leverage ratio is a stock ratio.
• D)A low leverage ratio reduces the size of the balance sheet.

Comprehend the importance of EBIT in evaluating a firm's operating performance.

Recognize the risks associated with high operating leverage and how it affects business risk.

Understand the impact of capital structure decisions on a firm's EPS and risk profile.

Identify the components and significance of the breakeven point in financial analysis.

---

Definitions:

Premenstrual Dysphoric Disorder

A set of symptoms occurring immediately prior to onset of menses characterized by a mixture of depression, anxiety and tension, and irritability and anger; may occur in mood swings during the week before onset of menses and subside once menses has begun.

Depressive Disorders

A set of disorders characterized by depressed mood and/or anhedonia (and not mania).

Distinguishes

Sets apart or identifies as different or unique through comparison or analysis.

Theories

Systematically organized sets of concepts that explain phenomena observed in the natural or social worlds.