A levered firm is a company that has:
A)accounts payable as its only liability.
B)some debt in its capital structure.
C)an all-equity capital structure.
D)a tax loss carry forward.
E)taxable income.

Question

Quizplus · Accepted Answer

A levered firm has debt in its capital structure, which means it has borrowed money and has an obligation to pay it back. This is different from an all-equity firm which has no debt and therefore no interest payments or principal repayments to make. The presence of debt means the firm has leverage, which amplifies both the potential gains and losses for shareholders.

A Levered Firm Is a Company That Has