Positive Financial Leverage Occurs in Which of the Following Situations

question 143

Multiple Choice

Positive financial leverage occurs in which of the following situations?

• A)Interest payments can be deducted for income tax purposes.
• B)The company's after-tax return on total assets is less than the after-tax cost of borrowing.
• C)The return to the owners is enhanced through the use of debt financing.
• D)Payment of resources to creditors is limited to the required interest payments while the return of the principal borrowed is not required.

---

Definitions:

Family Problem

Issues or conflicts arising within a family unit, potentially impacting the emotional, physical, and psychological well-being of its members.

On-The-Spot Interventions

Immediate actions taken in response to a situation or problem without prior planning.

Family System Equilibrium

The state of balance or stability within a family unit, where changes in one member's behavior can affect the entire system.

Rules

Prescribed directives or principles that govern the conduct of individuals within a society, organization, or system, ensuring order and fairness.