Answer: Financial leverage is a tool with which a financial manager can maximise the returns to the equity shareholders.Financial leverage refers to the use of debt to acquire additional assets. Financial leverage is also known as trading on equity. It is also referred as the degree to which an investor or business is utilizing borrowed money. Financial leverage is also known as trading on equity. It is calculated as follows: Financial Leverage= Operating Income(EBIT)/ Taxable Income(EBT).
Financial leverage is a tool with which a financial manager can maximise the returns to the equity shareholders.Financial leverage refers to the use of debt to acquire additional assets. Financial leverage is also known as trading on equity. It is also referred as the degree to which an investor or business is utilizing borrowed money. Financial leverage is also known as trading on equity. It is calculated as follows: Financial Leverage= Operating Income(EBIT)/ Taxable Income(EBT). Source: CoolInterview.com
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