Companies use different sources for financing their assets-internal resources as well as external resources, and debt (borrowed) as well as 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 B Company A Which of the following is true about the leveraging effect? Under economic growth conditions, firms with relatively low leverage will have higher expected returns. Under economic growth conditions, firms with relatively more leverage will have higher expected returns. Influenced by a firm's ability to make interest payments and pay back its debt, if all else is equal, creditors would prefer to give loans to companies with times-interest-earned ratios (TIE)