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As the financial leverage increases, the breakeven point of the company increases. The company now has to sell more of its product (or service) in order to break even.
As the financial leverage increases, the risk to banks and other lenders increases because of the higher probability of bankruptcy.
As the financial leverage increases, the risk to stockholders increases because greater losses may be incurred if the company goes bankrupt.
As the financial leverage increases, the risk to stockholders increases because the higher leverage will cause greater volatility in earnings and greater volatility in the stock price.
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What is the relationship between return on assets and return on equity?
Return on assets (ROA) measures a company's efficiency in using its assets to generate profit, while return on equity (ROE) assesses how effectively a company uses shareholders' equity to produce earnings. The relationship between the two is influenced by a company's financial leverage; higher leverage can boost ROE compared to ROA. Generally, a firm with strong ROA may also have a good ROE, but high leverage can distort this relationship, leading to a higher ROE despite a lower ROA. Thus, both metrics provide valuable insights into a company's financial performance from different angles.
What is the best way in SPSS to find out the strength of the relationship between the financial trends of a bank and the industry using financial statement items?
The best way in SPSS to find out the strength of the relationship between the financial trends of a bank and the industry using financial statement items is to use the determinants of Bank Profitability.
What is the relationship between financial decision making and risk and return?
plz quote me the answer of the above question
What is financial performance analysis?
Financial performance analysis is the method of correctly establishing the relationship between the profit and loss account and the things on the balance sheet. The information is used to identify the financial weaknesses and strengths of a firm.
Are current assets always greater than current liabilities?
No, current assets are not always greater than current liabilities. The relationship between the two depends on a company's financial situation. If current liabilities exceed current assets, it may indicate liquidity problems, potentially leading to financial distress. Conversely, having more current assets than liabilities is generally a sign of good short-term financial health.
Difference between operating leverage and financial leverage?
operating leverage is related to the investiment which is runing the business as finacial leverage related to the total equity minus laibalities .
Relationship between taxation pollution and financial statement?
relationship between pollution ,taxation and financial statement
What is the relationship between return on assets and return on equity?
Return on assets (ROA) measures a company's efficiency in using its assets to generate profit, while return on equity (ROE) assesses how effectively a company uses shareholders' equity to produce earnings. The relationship between the two is influenced by a company's financial leverage; higher leverage can boost ROE compared to ROA. Generally, a firm with strong ROA may also have a good ROE, but high leverage can distort this relationship, leading to a higher ROE despite a lower ROA. Thus, both metrics provide valuable insights into a company's financial performance from different angles.
What is the relationship between financial services and overall financial planning?
GEHY!!!!!!!!!!!!!!!!
Explain relationship between financial and non-financial performance indicators in achieving corporate governance compliance?
relationship between financial and non-financial performance indicators in achieving corporate governance compliance.
What is the difference between Leverage and Unlevering?
In finance, leverage is a general term for any technique to multiply gains and losses. The unlevered beta is the beta of a company without any debt. Unlevering a beta removes the financial effects from leverage.
What is the relationship between financial accounting and Statistics?
what is the relationships between statistics and accounting
What is the relationship between insurance and successful financial management?
money
What is the relationship between price and yield in financial markets?
In financial markets, there is an inverse relationship between price and yield. When the price of a financial asset goes up, its yield goes down, and vice versa. This relationship is important for investors to consider when making decisions about buying or selling securities.
If doubling the manipulating variable results in a doubling of the responding variable the relationship between the variables is a?
This would indicate that there is a linear relationship between manipulating and responding variables.
What is the best way in SPSS to find out the strength of the relationship between the financial trends of a bank and the industry using financial statement items?
The best way in SPSS to find out the strength of the relationship between the financial trends of a bank and the industry using financial statement items is to use the determinants of Bank Profitability.
What is financial gearing?
It is the relationship between shareholders equity and fixed interest debt.
