The financial leverage ratio compares the amount of capital supplied by creditors to the amount supplied by owners.

Question

Quizplus · Accepted Answer

The financial leverage ratio, also known as the debt-to-equity ratio, measures the proportion of a company's funding that comes from debt compared to equity. It calculates the amount of capital supplied by creditors (debt) and compares it to the amount supplied by owners (equity). Therefore, the statement is true.

The Financial Leverage Ratio Compares the Amount of Capital Supplied