Accounting Multiple Choice Question – 17 November 2024

A highly-geared company’s financial risk is most likely to increase when it increases its?

Select ONE answer:

1. Operations
2. Geographical reach
3. Borrowings
4. Share capital

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > In a highly-geared company, the higher the proportion of borrowings the greater the financial risk. If business activity falls, the company may not be able to meet its interest payments.
4. Not correct

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