Negative Financial Leverage Occurs When The

question 33

Multiple Choice

Negative financial leverage occurs when the:

• A)Average net (after tax) interest rate on borrowed funds is less than the company's earnings rate on its assets.
• B)Return on assets is more than return on equity.
• C)Return on equity is more than return on assets.
• D)Operating expenses exceed gross profit.

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Definitions:

Social Media Landscape

The dynamic environment of social media platforms that includes trends, behaviors, and the interaction between users and technology.

Implicit Cost

A cost that does not require the outlay of money; it is measured by the value, in dollar terms, of forgone benefits.

Explicit Cost

A cost that requires an outlay of money.

Economic Profit

Revenue minus the opportunity cost of resources used; usually less than the accounting profit.