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Why would ?rms with high return on assets

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Reference no: EM131710200

The bene?ts hoped for in terms of ?nancial leverage is that a ?rm's borrowed funds at a stated interest rate can be invested in assets that will generate higher returns than the interest due on the borrowed funds.

  • Why would ?rms with high Return On Assets (ROA) refrain from leveraging up their ?rm by borrowing and investing the funds in pro?table assets?

Reference no: EM131710200

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