The more financially leveraged a firm, the smaller is its debt ratio.

Name: The more financially leveraged a firm, the smaller is its debt ratio.
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Financial leverage refers to the use of debt to acquire additional assets. A higher financial leverage means a higher use of debt, which increases the debt ratio, not decreases it. The debt ratio measures the proportion of a company's total assets that are financed by debt, so as financial leverage increases, so does the debt ratio.

The More Financially Leveraged a Firm, the Smaller Is Its