Which of the Following Statements Is TRUE for Financial Leverage

question 83

Multiple Choice

Which of the following statements is TRUE for financial leverage?

• A) The asset turnover ratio measures financial leverage.
• B) Financial leverage always increases profitability.
• C) Financial leverage is measured in the proportion of total assets relative to total equity.
• D) The higher the debt to equity ratio, the higher the financial leverage.

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Definitions:

De-Individuate

The psychological state where an individual loses self-awareness and feels less accountable for their actions, often occurring in group contexts.

Normative Influence

The impact of social norms and the desire to conform to the expectations of others on an individual's behavior.

Social Approval

The positive endorsement or acceptance by a social group or society.

Social Disapproval

The negative evaluation of an individual or group by others, often leading to exclusion or rejection.