A levered firm is a company that has:
A)Accounts Payable as the only liability on the balance sheet.
B)some debt in the capital structure.
C)all equity in the capital structure.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

A levered firm has debt in its capital structure, meaning it has borrowed money and has a liability on its balance sheet. Having only accounts payable as a liability (A) would not necessarily make the company levered, as accounts payable typically represent short-term obligations. Having all equity (C) would make the company unlevered, as there is no debt in the capital structure. Therefore, B is the best choice.

A Levered Firm Is a Company That Has