A decrease in the use of financing that requires fixed payments will result in a(n)________.
A)increase in financial risk
B)decrease in financial risk
C)increase in operating leverage
D)decrease in operating leverage

Question

Quizplus · Accepted Answer

A decrease in the use of financing that requires fixed payments would result in lower fixed costs, which would reduce the risk of financial distress, making it easier for the firm to meet its debt obligations. Therefore, a decrease in the use of financing that requires fixed payments would result in a decrease in financial risk.

A Decrease in the Use of Financing That Requires Fixed