what are the benefits/risks of financial leverage?

Q: What is meant by the term financial leverage?

A: Borrowed Capital: The money which is borrowed by a company from outsiders for a specified period of…

Q: In what way does leverage increase the riskiness of a loan?

A: The advantage a financial specialist or investor gets from utilizing debt is called financial…

Q: What is financing feedback?

A: Introduction: Financing feedback is generated when interest expenditure is overestimated, reducing…

Q: What are the benefits and corresponding risks of Financial Investment?

A: Financial Investments are investments that are made with the expectation to receive future financial…

Q: What is the goal of capital structure management?

A: In simple words, capital structure management refers to the process under which the managers take…

Q: What is meant by positive financial leverage?  What about negative financial leverage?

A: Leverage -It refers to the use of source of funds  for which the firm has to pay a fixed cost.

Q: What is financial engineering?

A: Answer: Financial engineering is a process of solving problems and financial problems by using…

Q: Why is there a positive leverage from use of debt? How can we tell that?

A: Positive leverage: Leverage is the concept of investment by using the borrowed funds. Positive…

Q: How does operating leverage affect business risk?

A: If an organization has high fixed expenses or cost, and if an organization experiences issues…

Q: What is the role of capital market?

A: Introduction : Savings, as well as investment opportunities, are routed between providers…

Q: capital controls, which investment would you choose? What are the risks associated with this trade?

A: The United States has always been ranked among the best in the world for its competitiveness and…

Q: What is financial risk?

A: Risk refers to the undesired consequences arises due to the uncertainty. In other words, risk refers…

Q: Why is financial leverage is attractive

A: Introduction : In simple words, financial leverage refers to the process in which a company buys…

Q: What is investor-supplied capital?

A: A business might make a return on its invested capital that surpasses the cost of that capital.

Q: What is the difference between business risk and financial risk?

A: Risk Analysis: The risk analysis is defined as the process of recognizing the potential problems…

Q: What is Basic Calculations of Financial Leverage?  Please provide example.

A: Financial Leverage:It represents that how a company uses its debt to acquire assets. It also shows…

Q: Explain this statement: Using financial leverage has both good and bad effects.

A: financial leverage is the process of borrowing capital to make an investment, with the assurance…

Q: Define the term s financial leverage?

A: Financial leverage means buying the asset by taking the debt. The company always uses leverage…

Q: Explain the parameters or situations used to determine if the operating and financial leverages are…

A: Operating leverage is based on the cost structure of the company. It is the extent of fixed and…

Q: why is a risk analysis important to the capital investment decision making process?

A: Risk is the uncertainty or possibility of loss due to the decision in investment process. Of all the…

Q: What is financial asset market?

A: Financial assets generally include bonds, stocks, mutual funds, cash, deposits with bank etc. These…

Q: Explain the Leverage and the Incremental Cost of Debt with example?

A: Leverage – Leverage is a financial term it means using the debt for their financial needs and…

Q: What is the Degree of Operating Leverage (DOL), Degree of Financial Leverage (DFL) and Degree of…

A: Leverage means the use of certain fixed costs, where the firm levers up its profitability. It…

Q: What is the return on invested capital (RIC)?

A: Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in…

Q: What is the difference between financial leverage and operating leverage

A: Operating leverage: Operating leverage is a sign of how a corporation's costs are organized and is…

Q: What is the risk in the context of financial decision making and performance?

A: Financial decision making: Financial decision making denotes to decision making concerning financial…

Q: Explain Financial Leverage?

A: Companies going for purchase of assets have three options for financing. They are equity, debt &…

Q: Define Seller Financing?

A: Seller financing : Seller financing is real estate agreement which means seller financing the real…

Q: What is positive and negative financial leverage? How are returns or losses magnified as the degree…

A: Leverage is a growth strategy in which companies or individuals use borrowed funds for increasing…

Q: What factors contribute to the risk of overusing financial leverage?

A: Financial leverage is the use of debt in the capital structure to acquire additional assets. Use of…

Q: What is financial leverage?

A: Capital Structure:   It refers to the combination of debt and equity that constitutes the finances…

Q: what is the difference between investing and financing activities?

A: Cash flow statement include cash flows resulting from operating activities, investing activities and…

Q: What is return on investment?

A: Return on investment  is a financial ratio which is measured as net income divided by the cost of…

Q: Define Financial leverage.

A: Leverage: Leverage measures overlook the mixture of debt and equity which is required for analyzing…

Q: What does “investment risk” mean?

A: Risk is referred as uncertainty or loss. Financial risk is referred as the variability of actual…

Q: What happens to the costs of debt and equity when leverageincreases? Explain.

A: Introduction: The term leverage is nothing but using borrowed funds as a source of funding when the…