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Financial Management — Business Studies STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceBusiness StudiesFinancial Management1 Mark
MCQ
Objective type question.
Higher debt equity ratio $\Big(\frac{\text{Debt}}{\text{Equity}}\Big)$ results in:
  • A
    Lower financial risk.
  • B
    Higher degree of operating risk.
  • ✓
    Higher degree of financial risk.
  • D
    Higher EPS.
✓

Answer

Correct option: C.
Higher degree of financial risk.
Higher debt equity ratio results in higher degree of financial risk.

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