Generally, Decreases in Leverage Result in Increased Return and Risk

question 54

True/False

Generally, decreases in leverage result in increased return and risk, whereas increases in leverage result in decreased return and risk.

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Definitions:

Sales On Account

Transactions where the buyer purchases goods or services on credit, with an agreement to pay at a later date.

Accounts Receivable

Funds that clients or customers are yet to pay to a company for products or services that have already been provided or utilized.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity.

Long-term Liabilities

Financial obligations of a business that are due more than one year in the future, such as bonds payable, long-term loans, and lease obligations.