The more ________ used,the greater the leverage a company employs on behalf of its owners.
A)debt
B)equity
C)debt and equity
D)All of these

Question

Quizplus · Accepted Answer

The more debt used, the greater the leverage a company employs. Leverage increases with debt because debt financing can amplify both gains and losses, impacting the returns to the owners more significantly than equity financing. Equity does not increase financial leverage in the same way because it does not require fixed payments and does not amplify returns in the same manner as debt.

The More ________ Used,the Greater the Leverage a Company Employs