Which of the following statements is incorrect?
A) Higher financial leverage involves higher risk.
B) Risk is higher if a company has more liabilities.
C) Risk is higher if a company has higher assets.
D) The debt ratio is one measure of financial risk.
E) Lower financial leverage involves lower risk.

Question

Quizplus · Accepted Answer

The statement "Risk is higher if a company has higher assets" is incorrect. Higher assets do not necessarily increase the risk of a company. In fact, having more assets can often decrease risk by providing a cushion to absorb potential financial losses.

Which of the Following Statements Is Incorrect