Financial leverage, Financial Management

Financial Leverage

In accounting and finance, the amount of long lasting debt that an organization has in relation to its equity the longer the ratio, the larger the leverage. Leverage is generally calculated by a difference of the debt-to-equity ratio, which is calculated as follows:

1764_leverage.png

A company's optimal leverage depends on the stability of its earnings.  A company with consistently high earnings can be more leveraged than an organization with variable earnings, because it will consistently be more likely to make the needs interest and principal payments.

Posted Date: 10/17/2012 3:33:18 AM | Location : United States







Related Discussions:- Financial leverage, Assignment Help, Ask Question on Financial leverage, Get Answer, Expert's Help, Financial leverage Discussions

Write discussion on Financial leverage
Your posts are moderated
Related Questions
how do we compute for benefits can derrive out of using lockbox system?

Given below are the cash flows of a project. Find out the net present value of the project. Cost of capital is 18% and initial investment is Rs. 2,00,000. Year Cash Flows (lakhs)

For holders of CARDS, the interest is paid monthly and the principal is not amortized. The principal payments made by credit card borrowers are

Illustrate the zero bonds security instruments. Zero coupon bonds are instruments under that a borrower promises, at the recent time, to pay one exact nominal sum (face value)

Q. Show Social and Regulatory Factors? Regulatory climate and legislation against the environmental degradation may impair the profitability of the industry. Price control, vol

Performance of Mutual Funds The performance of Mutual Funds can be evaluated by calculating the rate of return earned during the relevant comparison period. The return will inc

Determine Current ratio  or working capital ratio CA = Current assets/Current liabilities (times) Current ratio measures the short term solvency or liquidity; it demonstra


List the benefits of the flexible exchange rate regime. Answer:  The benefits of the flexible exchange rate system include: a) Automatic attainment of balance of payments eq

On 1 July 2006, Goela Ltd was registered and offered 1 000 000 ordinary shares to the public at an issue price of $1.70, payable as follows: 50c on application (due 31 August)