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Financial leverage measures the relative use of debt versus equity to finance the company s assets. The formula to calculate financial leverage is: Average total
Financial leverage measures the relative use of debt versus equity to finance the companys assets. The formula to calculate financial leverage is:
Average total assets divided by Average total stockholders' equity.
If a company's financial leverage is which of the following statement can NOT be concluded correctly?
a of the total average assets are financed by average equity.
b of the total average assets are financed by average debt.
c The total average assets of the company is times of the total average stockholders' equity.
d of the total average assets are financed by average equity.
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