All other things being equal, which of the following actions will achieve a company's wish to increase its financial leverage?

I. Repurchase stock
II. Issue more dividends
III. Sell accounts receivable at face value
IV. Split stock 2 for 1

A)I, II, and III
B)I and II
C)I and IV
D)I, II, and IV

Question

All other things being equal, which of the following actions will achieve a company's wish to increase its financial leverage?

I. Repurchase stock
II. Issue more dividends
III. Sell accounts receivable at face value
IV. Split stock 2 for 1

A)I, II, and III
B)I and II
C)I and IV
D)I, II, and IV

Quizplus · Accepted Answer

Repurchasing stock (I) increases financial leverage by reducing equity and increasing the debt-to-equity ratio. Issuing more dividends (II) can also increase leverage by reducing retained earnings, thus decreasing equity. Selling accounts receivable (III) and splitting stock (IV) do not affect financial leverage.

All Other Things Being Equal, Which of the Following Actions