Question

The rising equity multiplier for Lowe's appeared to be primarily the result of

the firm repurchasing much of it's own stock and reducing its shareholder's equity.

the firm is increasing its use of debt in order to become more competitive against Home Depot. It is the smaller company and is investing to grow.

using profits to increase its retained earnings and overall shareholder's equity. Thus, the equity multiple is rising.

Answer 1

Option B is correct,

The firm is increasing its use of debt in order to become more competitive against Home Depot. It is the smaller company and is investing to grow.

Explanation:

If the company will increase it's debt, assets will also increase without any increase in equity,

Equity Multiplier = Total Assets/Equity

So assets will increase without any change in equity so equity multiplier will increase.