Financial leverage, Financial Management

Assignment Help:

Financial Leverage

In accounting and finance, the amount of long lasting debt that an organization has in relation to its equity the longer the ratio, the larger the leverage. Leverage is generally calculated by a difference of the debt-to-equity ratio, which is calculated as follows:

1764_leverage.png

A company's optimal leverage depends on the stability of its earnings.  A company with consistently high earnings can be more leveraged than an organization with variable earnings, because it will consistently be more likely to make the needs interest and principal payments.


Related Discussions:- Financial leverage

Calculate the ex-right stock price, DIY Inc. plans to raise $200,000 with a...

DIY Inc. plans to raise $200,000 with a right offering. The current stock price is $100 and there are 80,000 shares outstanding. a. If DIY sets the subscription price to be $80

State about the investigate of competition directorate, State about the inv...

State about the investigate of Competition Directorate Competition Directorate will generally investigate the below areas: (i)  Mergers and takeovers This is when larg

OPERATING CYCLE, Discuss the applicability of an operating in vegetable gro...

Discuss the applicability of an operating in vegetable growing business in Uganda.

Market value ratios, Market Value Ratios Price-Earnings Ratio ...

Market Value Ratios Price-Earnings Ratio P/E ratio shows how much investors are willing to pay for earnings per share of the company. Market-to-Bo

Explain pro forma financial statements management goals, Explain how manage...

Explain how management goals are incorporated into pro forma financial statements. Management put a target goal and forecasters makes pro forma financial statements under the

What do you mean by synergy, Q. What do you mean by synergy? Synergy: s...

Q. What do you mean by synergy? Synergy: synergy refers to the greater combined value of merged firms than the sum of the values of individual units. It is something like one p

Credit rating, As the number of companies borrowing directly from the...

As the number of companies borrowing directly from the capital market increases, and as the industrial environment becomes more and more competitive and demanding,

Core Concepts, Do you have Textbook solutions for Financial Management Core...

Do you have Textbook solutions for Financial Management Core Concepts Author: Raymond M. Brooks. ISBN 978-0-13-267103-3.

Net present value (npv), Net Present Value (NPV) In corporate finance, ...

Net Present Value (NPV) In corporate finance, the current value (the value of cash to be received in the future expressed in today's dollars) of an investment in excess of the

Coefficient of determination, Coefficient of Determination As before, ...

Coefficient of Determination As before, Where, We can show that TSS = RSS + ESS We can also show that F = is an F distr

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd