Which of the following is true about the leveraging effect? O Interest on debt can be deducted from pre-tax income, resulting in a greater taxable income and a smaller available operating income. Interest on debt is a tax deductible expense, which means that it can reduce a firm's taxable income and tax obligation 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 debt ratios. low high