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.