The higher the degree of financial leverage employed by a firm, the
Options:
| A. Higher is the probability that the firm will encounter financial distress. B. Lower is the amount of debt incurred. C. Less debt a firm has per dollar of total assets. D. Higher is the number of outstanding shares of stock. E. Lower is the balance in accounts payable. |
The Correct Answer Is:
A. Higher is the probability that the firm will encounter financial distress.