The records of Twain Company include the following: $$\begin{array} { | l | r | }
\hline \text { Average total assets } & \$ 60,000 \
\hline \text { Average total liabilities } & 25,000 \
\hline \text { Total revenue } & 107,600 \
\hline \text { Total expense (including income tax) } & 104,000 \
\hline \text { Interest expense (included in total expenses) } & 2,000 \
\hline \text { Income tax rate 40\% } & \
\hline
\end{array}$$ What is the financial leverage percentage (rounded to the nearest percent)?
A) 4%
B) 5%
C) 7%
D) 9%

Question

The records of Twain Company include the following: $$\begin{array} { | l | r | } 
\hline \text { Average total assets } & \$ 60,000 \
\hline \text { Average total liabilities } & 25,000 \
\hline \text { Total revenue } & 107,600 \
\hline \text { Total expense (including income tax) } & 104,000 \
\hline \text { Interest expense (included in total expenses) } & 2,000 \
\hline \text { Income tax rate 40\% } & \
\hline
\end{array}$$ What is the financial leverage percentage (rounded to the nearest percent)?
A) 4%
B) 5%
C) 7%
D) 9%

Quizplus · Accepted Answer

The financial leverage percentage is calculated as follows:Financial leverage percentage = (Average total liabilities / Average total assets) x 100= (25,000 / 60,000) x 100= 41.67%= 42% (rounded to the nearest percent)

The Records of Twain Company Include the Following What Is the Financial Leverage Percentage (Rounded to the Nearest