Everything Else Equal, an Industry with More Leverage Will Have

question 28

Multiple Choice

Everything else equal, an industry with more leverage will have a ________.

• A) higher return on assets
• B) higher return on equity
• C) lower return on equity
• D) Both A & B

---

Definitions:

External Failure Costs

Costs associated with defects that are found after the product reaches the customer, including returns, repairs, and lost sales.

Schedule Of Activity

A detailed plan or timetable of expected or required actions and events over a given period.

Costs

An amount that must be paid or spent to buy or obtain something.

Factory Overhead

All indirect costs associated with manufacturing, such as utilities, maintenance, and salaries of supervisors, not directly tied to a specific product.