Langley Has a Debt Ratio of 0

question 14

Multiple Choice

Langley has a debt ratio of 0.3 and its competitor,Appleton,has a debt ratio equal to 0.7.Determine the statement below that is correct.

• A)Appleton finances a smaller percentage of its assets with liabilities as compared to Langley.
• B)Appleton's financial leverage is less than Langley's financial leverage.
• C)Appleton's financial leverage is greater than Langley's financial leverage.
• D)Langley has a higher risk from its financial leverage.
• E)Higher financial leverage involves lower risk.

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Definitions:

Unemployment Rate

The extent of unemployment within the labor force among those actively looking for jobs.

Labor Force

The total number of people employed and actively seeking employment within an economy.

War Theory

A subset of military theory that explores the philosophies, ethics, and logistics of warfare and conflict.

Expansion Phase

A period in the business cycle during which the economy grows and unemployment decreases.