Leverage is the amount of ________ on a firm's balance sheet.
A)equity
B)debt
C)preferred stock
D)assets
E)liabilities

Question

Quizplus · Accepted Answer

Leverage refers to the use of debt to finance a company's assets. Therefore, the correct answer is B – debt. The amount of debt a company has on its balance sheet is an important determinant of its financial health and risk. A heavily leveraged company is at greater risk of default if it is unable to meet its debt obligations, while a company with lower leverage is generally considered less risky. Therefore, understanding a company's leverage is important for both investors and creditors.

Leverage Is the Amount of ________ on a Firm's Balance