Which of the Following Statements Is True for Leverage

question 27

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:

Market Demand Curve

A graphical representation showing the relationship between the price of a good and the total quantity demanded across all consumers in the market.

Marginal Cost

The financial requirement to produce an additional unit of a product.

Inelastic

Describes a situation where the demand for a good or service is relatively unresponsive to changes in its price.

Market Power

Market power is the ability of a firm or a group of firms to raise and maintain prices at above-normal levels, influencing the terms and conditions of a particular market.