Ponlinaytion, a clothing company, imports its raw materials from different countries. To cover the cost of expensive raw materials, Ponlinaytion takes a yearly loan of $5 million from Heritage Rimier, a finance company. The remaining budget is covered by the company itself. The given scenario indicates that the firm most likely relies on measuring _____ to decide how it finances its overall operations and growth by using different sources of funds.

Question

Quizplus · Accepted Answer

Leverage ratios measure the extent to which a company is using borrowed money (debt) to finance its operations and growth. Ponlinaytion's reliance on a yearly loan indicates the use of leverage.

Ponlinaytion, a Clothing Company, Imports Its Raw Materials from Different