Question

Long-term debt on the common-size balance sheet of Solid Rock Construction over the past three years is 30%, 34%, and 40%, respectively. This indicates that the firm has increased its ______

Answer 1

Answer:

Leverage.

Explanation:

Long-term debt on the common-size balance sheet of Solid Rock Construction over the past three years is 30%, 34%, and 40%, respectively. This indicates that the firm has increased its Leverage.

Long Term Debt:

These are the debt which company has to pay with maturity of more than 12 months.

Leverage Ratios are the debt ratios. These ratios tells how company will meet its long term debt.  Leverage compares the assets or equity of company to the debt. If the shareholder assets are greater than creditor than company is less leveraged and vice versa.

Some of the ratios are:

• Debt ratio
• debt to equity ratio
• Equity ratio

Answer 2

Answer:

The correct answer is: Leverage.

Explanation:

Leverage is when an investor or company is using borrowed money to try to raise the rate of return earned on an investment. Businesses and individual investors also make use of the leverage to raise their earnings. Leverage is better measured by using the debt to equity ratio which is calculated by taking the total debt of a company and dividing it by the total equity.