What is a firm doing if it is using financial leverage?
A)Marketable securities is part of its assets structure.
B)It is using common stock as part of its capital structure.
C)It is using debt or preferred stock as part of its capital structure.
D)Accounts receivable is part of its asset structure.

Question

Quizplus · Accepted Answer

If a firm is using financial leverage, it is using debt or preferred stock as part of its capital structure. Financial leverage refers to the use of borrowed funds to finance a company's operations or investments with the aim of increasing returns for shareholders. This borrowing can be in the form of debt or preferred stock, which are both forms of financial leverage. Therefore, choice C is the best answer.

What Is a Firm Doing If It Is Using Financial