Earning more income on borrowed money than the related interest expense, thereby increasing the earnings for the owners of the business, is termed:

Question

Quizplus · Accepted Answer

This scenario is describing the concept of leverage, which involves using borrowed funds to invest in opportunities that generate a higher return than the cost of borrowing. This can increase the earnings and returns for the owners of the business. The other options (debt ratio, times-interest-earned ratio, rate of return on total assets) do not specifically relate to this concept.

Earning More Income on Borrowed Money Than the Related Interest