--%>

Introduction of the term Financial Leverage

Give a brief introduction of the term Financial Leverage?

E

Expert

Verified

It is a leverage that refers to high level of profitability due to high fixed financial expenditures. It consists of preference dividend and interest on loan. Higher financial leverage points out higher financial risk and higher break points. In this category the managers have flexibility in the choice of capital structure.

   Related Questions in Business Economics

  • Q : Maximizes profits in a perfectly

    Which of the given is not true for a firm within perfect competition: w) Profit equivalents total revenue minus total cost. x) Price equivalents average revenue. y) Average revenue is greater than marginal revenue. z) Marginal revenue equivalents the

  • Q : Describe four important areas to

    Describe four important areas to emphasize Expenditures?

  • Q : Way to determine nature price of Adam

    “Natural price” by Adam Smith of a good was eventually determined through: (1) the amount of capital used within production in the short run. (2) long-run average costs of production, that Adam Smith believed to be the amo

  • Q : The Federal corporate income tax Use

    Use the circular flow model to confirm this assertion for a 2% reduction in the Federal corporate income tax.

  • Q : Qualitative and Quantitative data What

    What is the difference between qualitative data and quantitative data, provide an example of each.

  • Q : Organization of employees-Division of

    ‘Mama’ Jean consists of one employee bake crumbly, graham cracker crusts at Mama’s Home-Pies, whereas the other stirs gooey, hot, apple filling. Her staff is organized in accord with a/an: (1) Task management system. (2) Division of labor. (3) Compar

  • Q : Mixed Economy Define the term Mixed

    Define the term Mixed Economy and also state their advantages and disadvantages?

  • Q : Generalization and abstraction are

    Explain the statement: “Generalization and abstraction are nearly synonymous.”?

  • Q : Describe Traditional approach of

    Briefly describe Traditional approach of capital structure?

  • Q : Problem on private resource ownership

    Relative to most of the other countries, the United States encompasses historically relied more greatly on: (1) Public resource ownership and private income distribution. (2) Decentralized decision making and private resource ownership. (3) Exports of textiles, automo