Describe financial leverage and low operating leverage
Describe briefly high financial leverage, low operating leverage?
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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.
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9. The following table shows annual sales data for Stuff Happens, Inc., over the ten-year 1998-2008 period: Year Sales ($ Millions) 1998 $2.0 1999 2.2 2000 2.4 2001 2.6 2002 2.8 2003 3.0 2004 3.2 2005 3.5 2006 3.8 2007 4.1 2008 4.3 A. Calculate the 1998-2008 growth rate in sales using
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