--%>

Describe financial leverage and low operating leverage

Describe briefly high financial leverage, low operating leverage?

E

Expert

Verified

Whenever financial leverage is high than fund is receives mainly through the preference shares, debts and debentures. This creates the base solid by keeping the operating leverage low on scale. The financial decision can be exploited as the management's disquiet can be earning per share that will favor the debt capital only. This will rise when the rate of interest on debentures is lower than rate of return in business. The decision is depended on earning per share devoid of any indication of the risks involved.

   Related Questions in Business Economics

  • Q : Individuals self-interests and broader

    A natural harmony among individuals serving their own self-interests and the broader interests of society was the main theme of the theories of __________, although this concept was not accepted through _________. Determine the correct answer from given options: (w) K

  • Q : Describe Net income approach Briefly

    Briefly describe Net income approach? Named who recommended this theory?

  • Q : Scientific method how does it relate to

    What is the scientific method and how does it relate to theoretical economics?  What is the difference between a hypothesis and an economic law or principle?

  • Q : Perfect competition and efficiency

    Which of the given describes a condition in which a good or service is produced at the lowest probable cost: w) productive efficiency. x) allocative efficiency. y) marginal efficiency. z) profit maximization Please

  • Q : Describe Spillovers and externalities

    Describe Spillovers and externalities?

  • Q : Type of expenditure at the local level

    What is the most important source of revenue and the major type of expenditure at the local level?

  • Q : Explain the following from Hull Explain

    Explain the following from Hull, England a news dispatch: “The fish market here slumped today to what local commentators called a ‘disastrous level’—all because of a shortage of potatoes”.

  • Q : Absolute advantage in international

    One early involvement of Adam Smith to the theory of gains by international trade, although later thoroughly revised and refined through David Ricardo, was the conception of: (1) mercantilism. (2) absolute advantage. (3) comparative a

  • Q : Society material wants are scarce

    Explain the foundation of economics where society’s material wants are scarce resources?

  • Q : Managerial Economics Managerial

    Managerial Economics Meaning and definition Managerial economics general refer to the integration of economy th