Financial Leverage
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What is financial leverage? Why might a company that has a high degree of operating leverage not want to have a high degree of financial leverage.
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The solution answers the question below and goes into quite a bit of detail regarding financial leverage. The answer is ideal for students looking for a detailed analysis of the question asked below. An excellent response to the question being asked.
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Financial leverage arises when a firm decides to finance a majority of its assets by taking on debt. Firms do this when they are unable to raise enough capital by issuing shares in the market to meet their business needs. When a firm takes on debt, it becomes a liability on which ...
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