--%>
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 : 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 : Example of self interest to define

    The concept of _____ was demonstrated by _____ along with the quotation, “The defeat of a bit finger would remain the average European from sleeping which night,... but, given he never saw them, he will snore along with the most profound security over the loss o

    		•
  • Q : Illustrate the advantage and

    Illustrate the advantage and disadvantage of Corporations?

    		•
  • Q : Define the term Abstractions in

    Define the term Abstractions in economics?

    		•
  • Q : Inefficiencies and inequities by

    An employer that exaggerates the safety of a position or the prospects for advancement to job applicants makes inefficiencies as well as arguable inequities due to: (1) signaling. (2) credentialism. (3) screening. (4) adverse selection. (5) a moral hazard.

  • Q : Describe the output effects of Inflation

    Describe the output effects of Inflation?

    		•
  • Q : Prices are the automatic regulator

    “Prices are the automatic regulator that tends to keep production and consumption in line with each other.”  Explain.

    		•
  • Q : Define the natural price by Adam Smith

    In words of Adam Smith, who theorized that the “natural price” of a good based most directly upon the: (1) wage rate and the relative amount of labor required to produce the good. (2) greater of the value of the good &ldqu

    		•
  • 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 : Reasons for change in expanded

    What are the reasons for change in expanded production possibilities with women?

    		•