'Leverage' is the amount of ________ on a firm's balance sheet.

Question

Quizplus · Accepted Answer

Leverage refers to the use of debt to finance a firm's operations or investments. Therefore, the amount of debt on a firm's balance sheet is the factor that determines its leverage. Equity and preferred stock represent sources of financing that do not increase a firm's leverage. Therefore, options A and B are incorrect. Option D is also not correct as leverage is a factor on a firm's balance sheet.

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