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Which of the following companies has the lowest degree of leverage?


Sagot :

The firm with a 20% Debt and 80% Equity has the lowest degree of leverage.

What is a degree of leverage?

This means  how much a firm operating income changes in response to a change in sales.

Because the Firm C has a low debt, this means its has the lowest degree of leverage when compared to others.

Therefore, the Option C is correct.

Missing options "90% Debt, 10% Equity

30% Debt, 70% Equity

20% Debt, 80% Equity

50% Debt, 50% Equity"

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