Calculate C Co's financial leverage and identify whether it was positive or negative.
A) 15.2% positive
B) 14.1% positive
C) 17.8% negative
D) 19.9% negative

Question

Quizplus · Accepted Answer

Financial leverage is positive when the return on equity (ROE) is greater than the cost of debt. The choice B indicates a positive leverage of 14.1%, suggesting that C Co's ROE exceeds its cost of debt by this percentage.

Calculate C Co's Financial Leverage and Identify Whether It Was