Which of the following statements is not correct?
A)Purchasing fixed assets through debt financing decreases the financial leverage ratio.
B)Accruing an expense will affect the net profit margin ratio.
C)Return on equity may increase even when the financial leverage ratio decreases.
D)Purchasing treasury stock results in a decrease in total asset turnover.

Question

Quizplus · Accepted Answer

Purchasing fixed assets through debt financing increases the financial leverage ratio because it increases the proportion of debt in the company's capital structure.

Which of the Following Statements Is Not Correct