The extent to which a firm relies on debt is referred to as:
A) Homemade leverage.
B) The target ratio.
C) Business leverage.
D) Proposition I.
E) Financial leverage.

Question

Quizplus · Accepted Answer

Financial leverage refers to the extent to which a firm uses borrowed money (debt) to finance its operations and growth. It measures the degree to which a company is funding its activities through debt as opposed to wholly owned funds.

The Extent to Which a Firm Relies on Debt Is