Question

Which of the following best describes a highly leveraged firm? A firm that relies heavily on equity A firm that has higher current assets than current liabilities A firm that has twice more equity than debt A firm that relies heavily on debt

Answer 1

A firm that relies heavily on debt are the firm that describe a highly leverage firm. Highly leveraged firm refer to a firm that depends on borrowed capital. They have higher debt that equity. Their debt is what they considered as asset.