--%>

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 : What are the major provisions of GATT

    What are the major provisions of GATT

  • Q : Need of the Economic Efficiency

    Economic efficiency for society needs which the: (i) opportunity costs of all goods be at their lowest possible values. (ii) maximum probable benefits are acquired for given costs. (iii) greatest possible net benefits are squeezed through available re

  • Q : Production Possibility Curve Production

    Production Possibility Curve: Similar to the individuals, a society as entire has restricted resources. It has to decide what to manufacture with restricted resource

  • Q : Technical change and vintage technology

    In heterodox economics, what implications does technical change and vintage technology contain for the cost structure of the business enterprise?

  • Q : How government might manipulate its

    Explain how government might manipulate its expenditures and tax revenues to reduce unemployment?

  • Q : Real exchange rate Question: To

    Question: To determine the real exchange rate, what two pieces of information do you need in addition to the nominal exchange rate? Answer:

    Q : Restriction of laissez-faire government

    A laissez-faire government is restricted to finding: (1) property rights within a simple fashion and to enforcing private contracts. (2) market prices which guarantee equitable resource allocations. (c) how resources will be allocated efficiently. (4)

  • Q : Determine relative price when two

    When the prices for doughnuts and croissants are $.50 and $1 correspondingly: (w) the opportunity cost for one doughnut is two croissants. (x) this is better to buy two doughnuts than one croissant. (y) one croissant will make Pierre twice as happy as one doughnut. (z

  • Q : Importance of Earnings per share Write

    Write down the importance of Earnings per share?

  • Q : Different types of leverages in

    Write down the different types of leverages which are computed for financial analysis?