Which of the Following Statements Is True for Leverage

question 15

Multiple Choice

Which of the following statements is true for leverage?

• A)Assets turnover ratio measures financial leverage.
• B)Leverage always increases profitability.
• C)Leverage is shown in proportion of total assets relative to total equity.
• D)Higher the debt ratio, higher the leverage.

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Definitions:

High Pressure Pump

A device that increases the pressure of liquids, commonly used in industries requiring the precise control of fluids under high pressure.

Selling Price

The amount a buyer pays to acquire a product or service from a seller.

Value-Based Pricing

A pricing strategy where the price of a product or service is determined by the perceived value to the customer rather than the cost of production.

Useful Life

The estimated period over which a fixed asset is expected to be usable by an entity, beyond which it is considered to depreciate to a value of no or minimal worth.