You Find That a Firm That Uses Debt Has a Compound

Multiple Choice

You find that a firm that uses debt has a compound leverage factor less than 1. This tells you that ________.

A) the firm's use of financial leverage is positively contributing to ROE
B) the firm's use of financial leverage is negatively contributing to ROE
C) the firm's use of operating leverage is positively contributing to ROE
D) the firm's use of operating leverage is negatively contributing to ROE