A levered firm is a company that has:
A)Accounts Payable as the only liability on the balance sheet.
B)has some debt in the capital structure.
C)has all equity in the capital structure.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

A levered firm has some debt in its capital structure, which means that it has borrowed money and has a liability on its balance sheet. A firm with only Accounts Payable as the only liability (choice A) is not necessarily a levered firm as it may not have any debt, and a firm with all equity in its capital structure (choice C) is not a levered firm as it has no debt. Choice D is incorrect as it includes all options, including choice C which is not a levered firm. Choice E is incorrect as it does not provide any valid option.

A Levered Firm Is a Company That Has