Which of the following statements is CORRECT? Other things held constant, the more debt a firm uses,
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Question:
Which of the following statements is CORRECT?
- Other things held constant, the more debt a firm uses, the higher its operating margin will be.
- Debt management ratios show the extent to which a firm's managers are attempting to magnify returns on owners' capital through the use of financial leverage.
- Other things held constant, the more debt a firm uses, the higher its profit margin will be. Other things held constant, the higher a firm's debt ratio, the higher its TIE ratio will be.
- Debt management ratios show the extent to which a firm's managers are attempting to reduce risk through the use of financial leverage.
- The higher the debt ratio, the lower the risk
Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
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