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

What is current asset, Q. What is Current Asset? Current Asset - ASSET ...

Q. What is Current Asset? Current Asset - ASSET which one can reasonably expect to convert into cash, sell or consume in operations within a single operating cycle or within a

Essential features of a sound capital mix, ESSENTIAL FEATURES OF A SOUND CA...

ESSENTIAL FEATURES OF A SOUND CAPITAL MIX A sound or an appropriate Capital structure should have the following essential features : highest possible use of leverage

Valuing zero-coupon bond, As we know, zero-coupon bonds are issued wi...

As we know, zero-coupon bonds are issued without any periodic coupon payments. The investor gets the interest and the principal on a maturity date. The interest i

Financial management assignment, You have just had your 30 th birthday. Yo...

You have just had your 30 th birthday. You have two children. One will go to college 12 years from now and require four yearly payments for college expenses of RM11,000, RM12,000

Why is the coefficient of variation a better risk measure, Why is the coeff...

Why is the coefficient of variation a better risk measure to use than the standard deviation when evaluating the risk of capital budgeting projects? The coefficient of variatio

Pvif, how do we get the pvif of a perpetuity

how do we get the pvif of a perpetuity

Expalin depository institutions, Depository institutions Depository ins...

Depository institutions Depository institutions: intermediaries with a important proportion of their funds derived from customer deposits - include commercial banks - savings i

Define what effects have mergers had on fees assessed, What effects have me...

What effects have mergers had on fees assessed for retail bank services? A: The effect is not clear. Market conditions and the level of competition frequently determine the cost

Define some of government need imposed on public corporation, What are some...

What are some of the government needs imposed on a public corporation that are not imposed on a private, closely held corporation? Public corporations should submit audited finan

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