Define financial leverage and what is its effect on earnings

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Reference no: EM131290522

1. Why do many firms try to maintain a stable percentage of earnings retained?

2. Define financial leverage. What is its effect on earnings? When is the use of financial leverage advantageous and disadvantageous?

3. Given a set level of earnings before interest and tax, how will a rise in interest rates affect the degree of financial leverage?

Reference no: EM131290522

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