Higher the Debt Ratio, More the Financial Leverage a Firm

question 88

True/False

Higher the debt ratio, more the financial leverage a firm has and thus, the greater will be its risk and return.

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Definitions:

Corporate Schedule

A plan or timeline adopted by a corporation outlining important dates for tasks, projects, meetings, and financial reporting.

Loss Carrybacks

A tax provision allowing companies to apply current year losses to past income years to receive tax refunds.

Carryforwards

Tax provisions that allow firms to use current year's net operating losses to reduce taxable income in future periods.

Tax Loss

A loss that can be used to offset taxable income, thus reducing the taxes owed by an individual or corporation.