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Calculating Financial Leverage of a firm

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A firm has a return on common equity of 13.4 percent, a net after-tax borrowing cost of 4.5 percent, and a return of 11.2 percent on net operating assets of $405 million. What is the firm's financial leverage?

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Solution Summary

Solution describes the steps to calculate financial leverage of a firm.

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Given
ROCE=Return on common equity = 13.4%
NBC=Net borrowing costs =4.5% ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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