Financial leverage deals with
A) the relationship of fixed and variable costs.
B) the relationship of debt and equity in the capital structure.
C) the entire income statement.
D) the entire balance sheet.

Question

Quizplus · Accepted Answer

Financial leverage refers to the use of debt in a company's capital structure, which affects the relationship between debt and equity. It is important because it can increase the potential return on equity, but can also increase the risk of financial distress or bankruptcy.

Financial Leverage Deals with