Asked by
Brianna Collins
on Dec 01, 2024
Verified
A firm's financial leverage is a direct function of the ratio of net income to sales.
Financial Leverage
The use of borrowed funds to finance the acquisition of assets, with the expectation that the profits made will be greater than the interest payable.
Net Income
The total profit of a company after all expenses and taxes have been subtracted from revenues.
- Examine the effects of financial leverage on a business's financial results.
Verified Answer
GW
Learning Objectives
- Examine the effects of financial leverage on a business's financial results.