Which of the following best describes a highly leveraged firm?
A)A firm that relies heavily on equity
B)A firm that has equity that is twice the debt
C)A firm that relies heavily on debt
D)A firm that has higher current assets than current liabilities

Question

Quizplus · Accepted Answer

A highly leveraged firm is one that relies heavily on debt financing instead of equity. Therefore, choice C is the correct answer. Option A is incorrect because a firm that relies heavily on equity is not highly leveraged. Option B is incorrect because having equity that is twice the debt indicates a lower level of leverage. Option D is also incorrect because having higher current assets than current liabilities does not necessarily indicate a high level of leverage.

Which of the Following Best Describes a Highly Leveraged Firm