Ans. is Option A.
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Assets: €20 million
Liabilities: €8 million
Equity: €12 million
Revaluation increases asset value. What’s the new financial leverage ratio?
Answer:
Lower than 167%.
A. 3.6%
If both assets and equity are increased equally then leverage ratio will decrease.
But how 3.6% ? As other options are also less than 167%.