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Please no handwritten or copied answers How can leveraging debt or a fixed-cost asset affect cash...

Please no handwritten or copied answers

How can leveraging debt or a fixed-cost asset affect cash flow of the business?

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Leveraging debt means expanding the business through the help of external debt funding. In the short run it increases the cash inflow when the debt is infused in the business but debt involves a fixed interest outflow which increases the cash outflow in future. Leveraging a fixed cost asset is nothing but taking debt on the fixed asset as a mortgage. This also has the same effect as stated above.

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