A levered ﬁrm is a company that has:
A)accounts payable as the only liability on the balance sheet.
B)some debt in the capital structure.
C)all equity in the capital structure.
D)no long term liability.
E)None of the above.

Question

Quizplus · Accepted Answer

A levered firm has debt in its capital structure, which means it has long-term liabilities. Choice A, C, and D are incorrect because a levered firm does not necessarily have only accounts payable, all equity, or no long-term liabilities. Choice E is too general and does not provide a clear answer.

A Levered ﬁRm Is a Company That Has