Financial Leverage

question 64

Multiple Choice

Financial leverage:

• A)increases as the net working capital increases.
• B)is equal to the market value of a firm divided by the firm's book value.
• C)is inversely related to the level of debt.
• D)is the ratio of a firm's revenues to its fixed expenses.
• E)increases the potential return to the shareholders.

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Definitions:

Employment Contracts

Legal agreements between employers and employees specifying the terms of employment, including duties, compensation, and duration of the employment.

Negligence Or Mismanagement

Failure to exercise appropriate care or the mismanagement resulting in harm or loss.

Duty Of Loyalty

A legal obligation requiring individuals to act in the best interests of another party or entity, typically referring to corporate officers and directors.

Fiduciary

As a noun, a person having a duty created by his or her undertaking to act primarily for another’s benefit in matters connected with the undertaking. As an adjective, a relationship founded on trust and confidence.