All Else the Same, the Financial Leverage of a Firm

Multiple Choice

All else the same, the financial leverage of a firm will _________________.

A) Decrease as the debt/equity ratio increases.
B) Decrease as the firm's retained earnings account grows.
C) Increase by the amount of equity it issues in a given year.
D) Decrease if the firm has negative net income.
E) Decrease as the firm uses debt to fund expansion projects.