Which of the following scenarios indicates an effective use of financial leverage?
Which of the following scenarios indicates an effective use of financial leverage?
A . An organisation has a rate of return on equity of 20% and a rate of return on assets of 15%.
B . An organization has a current ratio of 2 and an inventory turnover of 12.
C . An organization has a debt to total assets ratio of 0.2 and an interest coverage ratio of 10.
D . An organization has a profit margin of 30% and an assets turnover of 7%.
Answer: B
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