Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

تمرين 4

Moffett Company earned a 16 percent return on its total assets. Current liabilities are 10 percent of total assets. Longterm bonds carrying an 11 percent coupon rate are equal to 30 percent of total assets. There is no preferred stock. Is this application of leverage favorable or unfavorable from the viewpoint of Moffett's stockholders?