A company that is leveraged is one that
A) contains debt financing.
B) contains equity financing.
C) has a high current ratio.
D) has a high earnings per share.

Question

Quizplus · Accepted Answer

A company that is leveraged contains debt financing, meaning that it has borrowed funds to finance its operations or expansion. This debt increases the company's leverage, or the degree to which it relies on borrowed funds to operate. This can increase the company's profitability if it can generate a higher return on its investments than the interest rate on its debt, but also increases risk if the company is not able to make its debt payments.

A Company That Is Leveraged Is One That