What Does the Term Financial Leverage Mean

question 90

Multiple Choice

What does the term financial leverage mean?

• A)The ability of a company to pay off its current liabilities
• B)The ability of a company to generate cash flows
• C)The amount of profit earned by one share of ordinary shares
• D)The proportion of a company's total capital that is financed by debt,as opposed to equity

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Definitions:

Negative

Characterized by absence, lack, or denial; often used to describe attitudes, behaviors, or outcomes that are detrimental or undesirable.

Marginal Revenue

The extra revenue earned by selling an additional unit of a product or service.

Marginal Cost

The cost incurred to produce one additional unit of a product or service.

Monopoly

A market structure characterized by a single seller, selling a unique product in the market.