--%>

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 : Explain the cause of Trade barriers

    Explain the cause of Trade barriers?

  • Q : How will the system accommodate change

    How will the system accommodate change?

  • Q : Elucidate the growth record of the

    Elucidate the growth record of the United States?

  • Q : Economic concepts of academic subjects

    The initial “professional” university professors who taught economic concepts like academic subjects, those were: (1) cosmologists. (2) moral philosophers. (3) socio-biologists. (4) natural historians (5) logicians. (6) mathematicians. (7)

  • Q : Distinguish between Individual as well

    Distinguish between Individual as well a market demand?

  • Q : Resource market for economic capital

    Janet has loaned a start-up coffee house $50,000 and predicts to earn interest from her financial investment. In circular flow model this transaction is an illustration of: (1) An exchange of her saving for interest, via a resource market for the economic capital. (2)

  • Q : Limitation of building blocks for a

    Building blocks for a capitalist system would not consist of: (1) supplies and demands. (2) private property rights. (3) laissez-faire policies. (4) market-found prices and outputs. (5) distribution of income in accord along with the principle, &ldquo

  • Q : Depreciation of the euro change the

    If the European euro declines in value (depreciates) in the foreign exchange market, would it be easier or harder for the French to sell their wine in the United States?  Suppose you were planning a trip to Paris.  How would the depreciation of the euro chan

  • Q : How government might manipulate its

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

  • Q : Reduce price differences by arbitrage

    When government intervention is not present, than arbitrage: (w) will reduce price differences when similar good sells at various prices within separate markets. (x) results into economic losses for traders. (y) causes high economic profits for mercha