Financial Leverage Ratios Indicate the Extent to Which Borrowed Funds

question 116

True/False

Financial leverage ratios indicate the extent to which borrowed funds are used to finance assets.

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Definitions:

Available Resources

The total assets, both natural and man-made, that can be utilized to produce goods and services.

Production Possibilities Curve

A graph that shows the maximum number of possible units a company can produce if it only produces two types of goods.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, highlighting the trade-offs in production levels between two commodities.

Fully Employed Resources

A situation in which all available labor and capital resources are being used in the most economically efficient way.