what is meant by financial leverage?
How does financial leverage influence the level of financial risk?
Financial leverage refers to the use of borowed money or debt in an entity's capital structure for business. It is often measured using the financial ratio whose formula is (Earnings before interest and tax/ Earnings before tax)
Financial leverage influences risk as use of debt in capital structure increases the burden of compulsory interest payments for the company. During periods of good performance by the company, this might not seem like an issue, but during difficult times this burden could be too much for the company and even in extreme circumstances, might lead the company to run out of business. Hence, it increases the risk of the equity shareholders, thereby influencing financial risk.
what is meant by financial leverage? How does financial leverage influence the level of financial risk?
What is meant by the term leverage? How are operating leverage, financial leverage, and total leverage related to the income statement?
What are business risk and financial risk? How do each influence the firm's capital structure decisions?
What is operating leverage, and how does it affect a firm's business risk? a. Show the operating break-even point if a company has fixed costs of $22,000, a sales price of $36, and variables costs of $14. b. What is the break-even quantity if the price is decreased to $30? c. What is the break-even point if the price is decreased to $30 and costs increase to $19?
What is meant by the term "operating leverage"? Is high operating leverage a positive or negative position?
1. Explain what is meant by business risk and financial risk. Suppose Firm A has greater business risk than Firm B. Is it true that Firm A also has a higher cost of equity capital? Explain. 2. Is there an easily identifiable debt-equity ratio that will maximize the value of a firm? Why or why not?
2. What is operating leverage? How, if at all, is it similar to financial leverage? If a firm has high operating leverage would you expect it to have high or low financial leverage? Explain your reasoning. Please also add to your answer an example of where an HR manager may use operating leverage to his or her advantage.
4. Explain what is meant by Risk Management and Financial Crime, why it can happen and how to overcome it, also give an example. 5. Why is it necessary to audit the information system, what steps need to be taken, give an example in your office, if not yet working, can use the example in one of the organizations / companies of products / services.
What is meant by unbundling? How might this lead to more economic efficiency and less risk in the financial system? How do economies of scale fit it? What might investors be cautious about buying participations in a securities pool of loans? How is the is related to adverse selection? How might they be assured about the underlying quality of assets in the pool?
1a. Identify 3 to 5 factors that influence risk management in health care. 1b. How does the selected factor influence risk management in health care?
How does the financial strength of an organization influence decision making and outcomes?