Financial leverage multiplier is the ratio of ________.
A) current assets to common stockholders' equity
B) total assets to common stockholders' equity
C) total assets to total debt
D) current assets to current liabilities

Question

Quizplus · Accepted Answer

The financial leverage multiplier is a measure of the amount of debt used by a company in relation to its equity. It is calculated as total assets divided by common stockholders' equity. Therefore, option B is the correct answer. Option A is not relevant to the calculation of financial leverage, option C is the debt to asset ratio, and option D is the current ratio.

Financial Leverage Multiplier Is the Ratio of ________