Leverage ratios doubt

CFA Level I
#1

Hi and thank you in advance:

When they ask us these types of questions: Relative to expensing, which of the following least describes the effect of capitalizing borrowing costs on a firm’s reported financials? A. Leverage would appear higher for the firm.

I assume leverage as the financial leverage ratio (A/E), but it appears that they ask D/A (or D/E, D/C, etc) … when should I use which one or what do you recommend to me… thank you

#2

Leverage ratio is on default refer to Total Debt / Total Asset.

They’ll mention if they mean financial leverage.

Remember, the exam isn’t mean to trick you. Don’t overthink it too much.