00:01
Hello students, here is a question, which of the statement below is correct? so, we have four statement given here.
00:07
We have to choose which statement is the correct here.
00:11
So, the first is financial leverages raises with lower debt ratio, financial leverage raises with with a lower debt ratio.
00:36
So, the b is higher debt ratio is better for higher debt ratio is better for a company unless the industry is going through a recession for a company unless the industry is going through recession.
01:22
So option c is company with lower debt ratio companies with lower debt ratio are more risky to shareholders are more risky to shareholders and option d is having higher debt ratio higher debt ratio is neither good or bad is neither good or bad.
02:12
So this is for option d.
02:13
So we have four option here.
02:15
Let us discuss the answer for this.
02:17
So first point says that financial leverages raises with a lower debt ratio.
02:21
So this statement is incorrect.
02:24
Financial leverage is the amount of debt of a company uses finance its operations.
02:28
A lower debt ratio means the company using a less debt and therefore lower financial leverage.
02:33
So this option is incorrect...