If a company earns more with the money it borrows than it has to pay to borrow that money,it is called ________.
A)positive cost/benefit
B)negative cost/benefit
C)negative financial leverage
D)positive financial leverage

Question

Quizplus · Accepted Answer

This is known as positive financial leverage, as the company is earning more with the borrowed money than it has to pay to borrow that money. This can be a beneficial strategy for companies looking to increase their profits, but it also comes with the risk of increased debt and interest payments if the investments don't yield the expected returns.

If a Company Earns More with the Money It Borrows