The capital structure leverage ratio indicates
A)the sales generated from each dollar of assets.
B)the portion of the sales dollar left over for the common shareholders after covering all operating costs and subtracting claims of creditors and preferred shareholders.
C)the portion of the sales dollar left over for the preferred shareholders after covering all operating costs and subtracting claims of creditors and common shareholders.
D)the proportion of total assets, or total financing, provided by common shareholders contrasted with the financing provided by creditors and preferred shareholders.
E)the proportion of total assets, or total financing, provided by preferred shareholders contrasted with the financing provided by creditors and common shareholders.

Question

Quizplus · Accepted Answer

The capital structure leverage ratio gives an idea of the proportion of total assets financed by common shareholders compared to the financing provided by preferred shareholders and creditors. It indicates the level of debt in a company's capital structure and its reliance on equity financing. Therefore, the correct choice is D.

The Capital Structure Leverage Ratio Indicates