Companies use different sources for financing their assets-internal resources as well as external resources, and debt (borrowed) as well as equity funds. Which of the following is considered a financially leveraged firm? company that uses debt to finance some of its assets A company that uses only equity to finance its assets Which of the following is true about the leveraging effect? ? Interest on debt can be deducted, leading to higher taxable income and a lower available operating income. Interest on debt can be deducted, leading to lower taxable income and lower taxes. 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)