Which of the following statement is wrong ? Financial flexibility is higher for
ID: 2735242 • Letter: W
Question
Which of the following statement is wrong?
Financial flexibility is higher for firms with high operating ROA.
Higher leverage is associated with higher borrowing cost.
Preferred stock is a part of equity and should not be included in liabilities when calculating financial leverage.
The higher a firm’s positive spread between its operating ROA and net borrowing rate, the more benefit its common stockholders will derive from having capital structure leverage in the firm.
Financial flexibility is higher for firms with high operating ROA.
Higher leverage is associated with higher borrowing cost.
Preferred stock is a part of equity and should not be included in liabilities when calculating financial leverage.
The higher a firm’s positive spread between its operating ROA and net borrowing rate, the more benefit its common stockholders will derive from having capital structure leverage in the firm.
Explanation / Answer
Preferred stock is a part of equity and should not be included in liabilities when calculating financial leverage.
The above sttaement is wrong
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.