A firm that has high interest payments relative to other companies is said to have
A) a poor finance department.
B) a high degree of financial leveraging.
C) no financial leveraging.
D) a high degree of operating leverage.

Question

Quizplus · Accepted Answer

High interest payments relative to other companies indicate that the firm has borrowed a significant amount of money to finance its operations, leading to a high degree of financial leveraging. This can be risky because it increases the firm's financial risk, but it can also potentially lead to higher returns if the firm is successful in utilizing the borrowed funds effectively.

A Firm That Has High Interest Payments Relative to Other