Capital Structure Question:

What does high/ low financial leverage indicate?

Capital Structure Interview Question
Capital Structure Interview Question

Answer:

High financial leverage indicates the risky investment made by the company's shareholders. Low financial leverage indicates that management has adopted a very good approach towards the debt capital. This decreases the management decision making on earning per share.


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Explain Financial Leverage. How is it calculated? What does high/ low financial leverage indicate?What does financial leverage indicate? What are its limitations?