In general, the more debt (other people's money) a firm uses in relation to its assets, the smaller its financial leverage.

Question

Quizplus · Accepted Answer

The statement is incorrect. The more debt a firm uses in relation to its assets, the higher its financial leverage. Financial leverage measures the amount of debt a company uses to finance its operations and investments, and a higher leverage usually indicates higher risk and potential for higher returns but also higher potential for losses.

In General, the More Debt (Other People's Money) a Firm