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

International markets, Explain the random walk model for exchange rate fore...

Explain the random walk model for exchange rate forecasting. Can it be consistent with technical analysis?

Eurobonds, The term 'Eurobonds' refers to bonds issued and sold outsi...

The term 'Eurobonds' refers to bonds issued and sold outside the home country of the currency. For example, a dollar denominated bond issued in the UK is a Euro (

Mutual fund services, Mutual Fund Services: Financial Mutual Funds laun...

Mutual Fund Services: Financial Mutual Funds launch schemes to cater to the need of the different categories of investors. They provide special services in addition to the retu

Bank loans for a company seeking short-term financing, What are the pros an...

What are the pros and cons of commercial paper relative to bank loans for a company seeking short-term financing? Commercial paper is generally a cheaper source of short-term f

Understanding financial metrics and business risk, Controlling is an essent...

Controlling is an essential management function as efficient control mechanisms ensure that the performance of the company increases over time through the incorporation of feedback

Annuties (ordinary vs due), The values shown in ordinary annuity tables (ei...

The values shown in ordinary annuity tables (either present value or compound value) can be adjusted to the annuity due form by ____ the ordinary annuity interest factor by ____. (

Break even period, It is also important to compare the returns from t...

It is also important to compare the returns from the equity stock and the bond to determine the profitability of both investments. We have seen above that the div

Prepare a monthly cash budget, Citilink will start a new business line on 1...

Citilink will start a new business line on 1st July, 2011 to make and sell bus souvenirs. The target sales and production volume are 525,000 in next year. The following projected

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