Financial leverage has to do with
A) the usage of fixed cost financial securities to finance a portion of a firm's assets.
B) using common stock to finance a portion of a firm's assets.
C) the incurrence of fixed operating costs in the firm's income stream.
D) a high gross profit margin.

Question

Quizplus · Accepted Answer

Financial leverage refers to the use of fixed-cost financial securities, such as debt, to finance a portion of a firm's assets. This allows a company to increase its potential gains through the use of borrowed money, but also increases the risk of financial losses.

Financial Leverage Has to Do with