Ch 04- Assignment - Analysis of Financial Statements\ Back to Assignment\ Attempts\ Average / 4\ 4. Debt (or leverage) management ratios\ Companies have the opportunity to use varying amounts of different sources of financing, including internal and external sources, to acquire their assets, debt (borrowed) funds, and equity funds.\ Company A uses long-term debt to finance its assets, and company B uses capital generated from shareholders to finance its assets. Which company would be considered a financially leveraged firm?\ Company A\ Company B\ Which of the following is true about the leveraging effect?\ Using leverage reduces a firm's potential for gains and losses.\ Using leverage can generate shareholder wealth, but if a company fails to make the interest and principal payments on its debt, credit

4. Debt (or leverage) management ratios Companies have the opportunity to use varying amounts of different sources of financing, including internal and external sources, to acquire their assets, debt (borrowed) funds, and equity funds. Company A uses long-term debt to finance its assets, and company B uses capital generated from shareholders to finance its assets. Which company would be considered a financially leveraged firm? Company A Company B Which of the following is true about the leveraging effect? Using leverage reduces a firm's potential for gains and losses. Using leverage can generate shareholder wealth, but if a company fails to make the interest and principal payments on its debt, credit 4. Debt (or leverage) management ratios Companies have the opportunity to use varying amounts of different sources of financing, including internal and external sources, to acquire their assets, debt (borrowed) funds, and equity funds. Company A uses long-term debt to finance its assets, and company B uses capital generated from shareholders to finance its assets. Which company would be considered a financially leveraged firm? Company A Company B Which of the following is true about the leveraging effect? Using leverage reduces a firm's potential for gains and losses. Using leverage can generate shareholder wealth, but if a company fails to make the interest and principal payments on its debt, credit