--%>

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 : Describe the term Cost of debt Briefly

    Briefly describe the term Cost of debt?

  • Q : Calculate the short-run profit or loss

    A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The cost of each good is $10. Calculate the firm's short-run profit or loss. w) loss of $6,000. x) profit of $6,000. y profit of $30,000. z) There is insufficient

  • Q : Heterodox approach for more production

    From the heterodox approach, what options does the enterprise need to produce more output? What effect do these options put on its cost structure?

  • Q : Laffer curve & Tax rate Question: Do

    Question: Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change? Using the 'human capital' investment model,

  • Q : Explain how an increase in state

    Use two market diagrams to explain how an increase in state subsidies to public colleges might affect tuition and enrollments in both public and private colleges.

  • Q : Characterized contestable markets

    Industries that are described as "contestable": (w) will experience long-run economic profits equal to zero. (x) are difficult for firms to enter, but not to exit. (y) are difficult for firms to exit, but not to enter. (z) will charge prices greater t

  • Q : Conception of the Invisible Hand by

    Conception of the “Invisible Hand” by Adam Smith relies on mechanisms like those as underpin: (1) William Stanley Jevons’ “sunspot” theory of business cycles. (2) the biological concept of Homeostasis. (3

  • Q : Introduction of the term Control

    Give a brief introduction of the term Control Principle?

  • Q : Elucidate the use of money as a medium

    Elucidate the use of money as a medium of exchange in Market System?

  • Q : Surpluses in the balance of trade The

    The advocates of laissez-faire policies favor: (i) Govt. control of economy. (ii) Public ownership of all the resources. (iii) Income to be distributed according to requirement. (iv) Surpluses in the balance of trade. (v) Minimal govt. intervention in economy.