soverby

I think this is where you have to understand the smaller value has the higher impact on the ratio. So both Equity and Asset will increase but Equity is smaller than Asset so equity has a stronger impact on the ratio. Thus Financial Leverage Decreases since Equity increase is stronger than the Asset increase.
Paying dividend is incorrent because paying divident would decrease equity such that Financial Leverage ratio would increase.
C is incorrect because more assets will increase the ratio.