If a Company Must Pay More for the Amounts Provided

question 126

True/False

If a company must pay more for the amounts provided by creditors and preferred stockholders than it can earn overall,as indicated by the return on assets,there will be favorable leverage.

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Definitions:

Selling Price

The amount of money for which an item is sold, potentially different from listing or cost price due to discounts or negotiations.

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Net Income

The amount of earnings left over after all expenses and taxes have been deducted from total revenue.

Revenue

The total amount of money received by a company for goods sold or services provided during a certain time period.