--%>
Assignment Help - homework help

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 : Illustrate major economic flows that

    Illustrate major economic flows that link U.S. with nations.  Provide an example to illustrate each flow.  Explain the relationship between the top and bottom flows.

    		•
  • Q : U.S. exports create a demand for

    True or false? “U.S. exports create a demand for foreign currencies; foreign imports of U.S. goods generate supplies of foreign currencies.”  Explain.

    		•
  • Q : Drawbacks of capital budgeting Write

    Write down the drawbacks of capital budgeting?

    		•
  • Q : Comparative Advantage of free trade

    According to the advocates of free trade and World Trade Organization, each and every country potentially advantages from trade liberalization and the lowering of tariffs since each and every country: (1) Has a comparative benefit in something. (2) Ga

    		•
  • Q : Describe unanticipated inflation

    Describe unanticipated inflation?

    		•
  • Q : Calculate Equilibrium Quantity and Price

    1. The owner of a firm calculates that next year's profit will be $1,000. Each successive year profit will increase by 10% (i.e. year 2: $1100; year 3: $1210 and so on.) At the end of the 5th year the firm could be sold for $20,000. A) if the appropriate di

    		•
  • Q : Briefly state the pros and cons of

    Briefly state the pros and cons of Partnership?

    		•
  • Q : Determine the lowest average wages

    Consider a huge group of identically smart and strong industrious workers. All else identical, Adam Smith would predict such that the lowest average wages would be earned through the workers who were in the work that: (1) had the leas

    		•
  • Q : Loathed monopolization and viewed of

    Adam Smith and most of the typical economists who followed instantly in his footsteps: (i) viewed monopoly as no big problem. (ii) encouraged monopolies due to their research and development abilities. (iii) thought monopoly power was a communist plot

    		•
  • Q : Heterodox perspective of business

    I am facing difficulty in this question. Help me in find out correct answer of this economy based question. From heterodox perspective, why do business enterprises choose administered prices as opposed to highly flexible prices?

    		•