The financial leverage multiplier is an indicator of how much ________ a corporation is utilizing.
A) operating leverage
B) long-term debt
C) total debt
D) total assets

Question

Quizplus · Accepted Answer

The financial leverage multiplier is a ratio of a corporation's total assets to its equity, which means it indicates how much total debt the corporation is using to finance its assets, making choice C the correct answer. Operating leverage measures the fixed costs compared to variable costs, long-term debt is only one aspect of a company's total debt, and total assets are part of the calculation for the financial leverage multiplier, not what it represents.

The Financial Leverage Multiplier Is an Indicator of How Much