Q59
A firm will have favourable leverage if its _____ are more than the debt cost
A.
debt
B.
interest
C.
equity
D.
earnings
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
A firm will have favourable leverage if its earnings are more than the debt cost. Financial leverage is favorable when the uses to which debt can be put generate returns greater than the interest expense associated with the debt.