The capital structure leverage ratio
A)indicates the portion of total assets, or total financing, provided by common shareholders contrasted with the financing provided by creditors and preferred shareholders.
B)is larger when there is more financial leverage.
C)is smaller when there is less financial leverage.
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The capital structure leverage ratio indeed reflects the proportion of financing provided by shareholders versus creditors and preferred shareholders (A), increases with more financial leverage (B), and decreases with less financial leverage (C), making all of the above statements correct.

The Capital Structure Leverage Ratio