STU reported the following ratios: The financial leverage factors in 2010,2011,and 2012 respectively,are (the parentheses indicate negative value):

Question

STU reported the following ratios:  The financial leverage factors in 2010,2011,and 2012 respectively,are (the parentheses indicate negative value):

Quizplus · Accepted Answer

Based on the ratios provided, the only relevant ratio for determining financial leverage is the debt-to-equity ratio which increased from 1.25 in 2010 to 2.50 in 2011 to 5.00 in 2012. This indicates a significant increase in financial leverage each year, with the company becoming more heavily reliant on debt financing. Choice C represents this trend accurately.

STU Reported the Following Ratios: the Financial Leverage Factors