Statements about capital structure is false

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Reference no: EM131595401

Which of the following statements about capital structure is false?

In most situations, the use of debt financing increases the return to owners (say, as measured by ROE).

In all situations, the use of debt financing increases the riskiness to owners.

At some proportion of debt financing, the cost of debt levels offs and then decreases as more and more debt is added.

Debt financing allows more of a business’s operating income to flow through to investors.

Because debt financing “levers up” (increases) owners’ returns, its use is called financial leverage.

Reference no: EM131595401

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