The Firms Leverage Ratio Is 1

question 57

Multiple Choice

The firms leverage ratio is 1.2,interest burden ratio is .81,profit margin is .25,and its asset turnover is 1.10.What is the firm's compound leverage factor?

• A) .243
• B) .267
• C) .826
• D) .972

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Definitions:

Subsidiary

A company that is completely or partly owned and partly or wholly controlled by another company, known as the parent company.

Unrealised Profits

Profits that have been reported but not yet realized through cash or other payments.

Consolidation Adjustments

Adjustments made to a parent company's financial statements to eliminate the effects of intercompany transactions when consolidating subsidiaries.

Full Goodwill

An accounting method that recognizes goodwill based on the total purchase price of a subsidiary, including both the parent's and minority interest's share.