Financial leverage question assistance, following, question, decrease

RobertA

Hi
I’ve encountered the question below, and is still confused after reading the answer. Doesn’t finanal leverage mean (total assets)/(avg equity)? In which case, wouldn’t issuing common stock increase equity which would offset the increase in asset purchase? Any assistance is greatly appreciated. Thank you.
Which of the following events would decrease financial leverage?
A)
Paying dividends.
B)
Issuing common stock to purchase assets.
C)
Issuing debt to purchase assets.
Your answer: A was incorrect. The correct answer was B) Issuing common stock to purchase assets.
Acquiring assets by issuing stock decreases the degree of financial leverage since total assets are increased but total liabilities remain the same.