A company that is leveraged is one that
A) has a high earnings per share.
B) contains equity financing.
C) has minimized its risk of loss by acquiring a portfolio of investments.
D) contains debt financing.

Question

Quizplus · Accepted Answer

A company that is leveraged has a significant amount of debt financing, which means it has borrowed funds to invest in its operations. This can increase the company's profitability but also increases the risk and vulnerability to economic changes. Therefore, choice D is the best answer. The other options are incorrect because high earnings per share (choice A) do not necessarily imply leverage, equity financing (choice B) may be used to reduce leverage, and minimizing loss (choice C) is not directly related to leverage.

A Company That Is Leveraged Is One That