Explain this statement: Using financial leverage has both good and bad effects.

Q: What is the chief disadvantage of ROI as an investmentcenter performance measure? How does the…

A:

Q: What is financial leverage? Why is a one-year measure of return on investment inadequate in…

A: Financial leverage: The benefit from use of financial leverage arises when the interest rate on the…

Q: What advantage does the Sharpe Ratio

A: Sharpe ratio is also known as Sharpes measure or reward to volatility ratio. It is the ratio…

Q: Neptune Corporation wants to decrease its operating leverage. Which of the following results can the…

A: Operating leverage can be referred to as an accounting measure that determines the impact of revenue…

Q: If a firm increases its use of both operating and financial leverage, then you should expect the…

A: Operating Leverage: Increasing operating income by increasing revenue is a cost-accounting formula…

Q: d. Explain why NPV is considered technically superior to Payback and Accounting Rate of Return (ARR)…

A: There are various capital budgeting methods that can be used to assess or evaluate various…

Q: What does this statement mean? One type of leverage affects both EBIT and EPS. The other type…

A: Operating leverage is based on the cost structure of the company. It is the extent of fixed and…

Q: During economic downturns, negative financial leverage will have a positive dampening effect on ROE.…

A: Financial leverage means using the borrowed money for making investments in various assets. The main…

Q: Can you please give some examples of firms whereby a positive relationship exists between operating…

A: Leverage: The term leverage, in general, refers to a relationship between two interrelated…

Q: Since the use of leverage can benefit a fum when times are good, a high degree of leverage is…

A: Leverage is the use of debt in order to undertake in investment or project.  Leverage is a amount of…

Q: What does it mean if the companies operating leverage is higher or lower than another company!

A: Operating leverage is used to determine the efficiency of the firm to utilize fixed operating…

Q: When owners use financial leverage, they transfer part of their risk to

A: Question 44: Option e Question 45: Option d

Q: How can an unlevered firm uptain financial leverage

A: Unlevered firm is a firm with no debt in its capital structure. It does not have any financial…

Q: What are the two different formulas used to Calculate the degree of financial leverage (DFL)?

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: An ideal situation would be to keep leverage high and Jeverage low Select one: O a. Operating…

A: High operating leverage indicates that company is making few sales but with high margins. This shows…

Q: Describe the strengths and weakness of payback method.

A: Definition:   Payback method: Payback method refers to the method which measures the time period…

Q: Define each of the following terms:b. Operating leverage; financial leverage; break-even point

A: Answer: Operating leverage: This is the degree to which the company employs the fixed costs. The…

Q: Differentiate operating leverage from financial leverage.

A: Leverage is the amount of fixed costs a company has in its income statements. Greater leverage leads…

Q: It is better to use Free Cash Flow to Firm rather than Free Cash Flow to Equity when the leverage is…

A: The free cash flow is the amount of money remaining by adding the non cash expenses of the company.…

Q: How behavorial bias affect investment behavior?

A: Behavioral bias is the belief by the investors that unknowingly affects the investors investment…

Q: Why is financial leverage is attractive

A: Introduction : In simple words, financial leverage refers to the process in which a company buys…

Q: 3. How large is the gap between Beta(Asset) and Beta(Leverage)? What is the impact of their…

A: Beta is a metric used by shareholders to correlate the uncertainty of a securities or portfolio to…

Q: Analyze the disadvantages of financial performance measures and the advantages of non

A: Disadvantages of financial performance measures  1 They indicates short term performance measures. 2…

Q: Unfavorable leverage means Return of equity more than return of loan cost Return of equity less than…

A: Unfavourable leverage occurs when the firm does not earn the funds cost(i.e. loan cost).

Q: What is Basic Calculations of Financial Leverage?  Please provide example.

A: Financial Leverage:It represents that how a company uses its debt to acquire assets. It also shows…

Q: Briefly define capital risk and explain how a positive leverage-adjusted duration gap can contribute…

A: Capital risk is the potential of loss of part or all of an investment. It applies to the whole gamut…

Q: Explain the parameters or situations used to determine if the operating and financial leverages are…

A: Operating leverage is based on the cost structure of the company. It is the extent of fixed and…

Q: What could possibly go wrong while using financial leverage? Do you think it should be utilized by a…

A: Financial leverage: Financial leverage is a word that describes the use of borrowed money (debt) to…

Q: What is the Degree of Operating Leverage (DOL), Degree of Financial Leverage (DFL) and Degree of…

A: Leverage means the use of certain fixed costs, where the firm levers up its profitability. It…

Q: What is the investment center manager's preferred technique of calculating investment turnover,…

A: It is a unit of a firm that is evaluated based on the usage of its capital rather than the profits…

Q: What is positive and negative financial leverage? How are returns or losses magnified as the degree…

A: Leverage is a growth strategy in which companies or individuals use borrowed funds for increasing…

Q: What is Linda's degree of operating leverage?

A: Operating Cost is the efficiency ratio. It calculates the portion of the contribution covered by…

Q: Company X is more exposed to market risk than Company Y. Company> can compensate for this by using…

A: Financial leverage means the change in EPS due to change in EBIT. When a firm has positive financial…

Q: what are the benefits/risks of financial leverage?

A: Financial leverage is a condition wherein a company raises funds through the issue of additional…

Q: What is the financial advantage (disadvantage) of further processing the intermediateproduct?

A: Further Processing means carrying the production of goods to another level and shifting its…

Q: HAT ARE THE TYPES OF LEVERAGE? HOW ARE THEY CALCULATED AND WHAT DO THEY IMPLY?

A: Leverage is the technique of risk evaluation in a business. There are three types of Leverage…

Q: Unfavorable leverage means Return of equity more than return of loan cost Return of equity less than…

A: Unfavorable leverage occurs when the firm does not earn as the loan cost.