A company that reports high levels of common equity leverage is probably
A)reporting higher earnings per share than other companies in the same industry.
B)meeting its financing needs effectively.
C)using leverage very effectively.
D)demonstrating it has a large amount of off-balance-sheet financing.

Question

Quizplus · Accepted Answer

High levels of common equity leverage indicate that the company is using more debt relative to equity, which can amplify returns on equity if the company is performing well, thus suggesting effective use of leverage.

A Company That Reports High Levels of Common Equity Leverage