Financial Leverage Is Negative in Which of the Following Situations

question 104

Multiple Choice

Financial leverage is negative in which of the following situations?

• A) When the return on total assets is less than the rate of return on common shareholders' equity.
• B) When total liabilities are less than shareholders' equity.
• C) When total liabilities are less than total assets.
• D) When the return on total assets is less than the rate of return demanded by creditors.

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