How does this impact the income statement and shareholders

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Reference no: EM132055759

Leverage & Capital Structure

1) If a firm is highly leveraged (lots of debt...very high debt/equity ratio, for example), discuss the impact this has on the Income Statement and the shareholders.

2) Now discuss the opposite...little to no debt, but lots of equity. How does this impact the Income Statement and shareholders?

3) As a potential shareholder in any given firm, what capital structure would you prefer? Lots of debt or lots of equity?....Why?

4) What is your "Takeaway?"

Reference no: EM132055759

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