Leverage differs from profitability in that leverage measures:
A) the ability to operate at minimum cost.
B) the ability to meet short-term obligations.
C) the ability to earn revenues greater than costs.
D) the use of debt.
E) asset and inventory efficiency.

Question

Quizplus · Accepted Answer

Leverage measures the use of debt in a company's capital structure, whereas profitability measures a company's ability to generate profits from its operations. D is the only option that pertains to the use of debt.

Leverage Differs from Profitability in That Leverage Measures