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A major advantage is optimization of shareholders' wealth through mix of debt and equity, taking advantage of the U.S. tax system which favors debt financing by making interest deductible from income when calculating the company's federal tax liability. Low cost debt, especially when interest is low, would increase the return of equity relative to the return of assets. A disadvantage would be if the debt becomes too costly, it reduces the return of equity below the return of assets. Companies that are highly leverage in this case might find it difficult to make payments on their debt in times of trouble and also difficult to obtain additional financing from lenders.
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Disadvantages and advantages of financial aspect?
Why dont you ask your teacher :P
What do you mean by leverages and list the advantages and disadvantages of financial leverages operating leverages and combined leverages?
o improve or enhance: "It makes more sense to be able to leverage what we [public radio stations] do in a more effective way to our listeners" (Delano Lewis).
What is the impact of financial leverage on stockholders?
Financial leverage makes no impact on stockholders as any stockholder who prefers the proposed capital structure (ie leverage) can simply create it using homemade leverage. Note: financial leverage refers to the extent to which a firm relies on debt. Homemade leverage is the use of personal borrowing to change the overall amount of financial leverage to which the individual is exposed
Financial speculation its advantages and disadvantages?
Some advantages of financial speculation include the likelihood of making a return and the ability to maintain the value of an asset even through inflation. Some disadvantages include the possibility of loss in value and risk exposure to natural and manmade forces.
Why is Financial leverage important to financial management?
Financial leverage is important to financial management because it will give an advantage. It allows the organization or entity to have more security.
What are the advantages and disadvantages of a high leverage ratio?
disadvantages of a high leverage ratio in financial crisis
How can two disadvantages of tourist coming to the Bahamas become advantages?
Its depends what the two disadvantages are, and I can help you leverage them to be positive attributes.
What are the advantages and disadvantages of oil production to developing countries?
obviously the advantages are financial. the disadvantages would be pollution to there environment.
What are the advantages and disadvantages of Cohabitation?
Financial problems not knowing if you are ready
Advantages and disadvantages of having regulation of financial market in India?
..!..
What ar the advantages and disadvantages of financial system?
ur mama
Disadvantages and advantages of financial aspect?
Why dont you ask your teacher :P
What are the advantages and disadvantages of parastatal?
One of the advantages of parastatal is it receives financial support from the government since it is created in the interest of the public. One of the disadvantages is lack in government funding. In the event financial cutbacks are necessary.
What are the advantages and disadvantages of external equity?
One of the advantages of external funding is it allows you to use internal financial resources for other purposes..
What are the advantages and disadvantages of online-shop?
Higher chance of financial theft (apex)
What do you mean by leverages and list the advantages and disadvantages of financial leverages operating leverages and combined leverages?
o improve or enhance: "It makes more sense to be able to leverage what we [public radio stations] do in a more effective way to our listeners" (Delano Lewis).
What is combined leverage?
Combined leverage is the combined result of operating leverage and financial leverage.
