A Decrease in the Use of Financing That Requires Fixed

question 183

Multiple Choice

A decrease in the use of financing that requires fixed payments will result in a(n) ________.

• A)increase in financial risk
• B)decrease in financial risk
• C)increase in operating leverage
• D)decrease in operating leverage

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Definitions:

Rent Expense

The cost incurred by a business to use property or equipment for business purposes.

Income Statement

A financial document that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and net income.

Balance Sheet

A record that presents a summary of a business's assets, liabilities, and shareholders' equity at a given time.

Return on Assets

A financial ratio that measures the profitability of a company in relation to its total assets.