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Foundations of Business - Standalo...

4th Edition
William M. Pride + 2 others
ISBN: 9781285193946

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BuyFindarrow_forward

Foundations of Business - Standalo...

4th Edition
William M. Pride + 2 others
ISBN: 9781285193946
Textbook Problem

Describe how financial leverage can increase return on owners’ equity.

Summary Introduction

To determine: The ways financial leverage can increase return on owners’ equity.

Introduction: Financial leverage, likewise termed as trading on equity, is the budgetary trade off among the return on the issuance of preferred debt or stock and the cost of maintaining that debt or preferred stock.

Explanation

The ways financial leverage can increase return on owners’ equity are as follows:

Financial leverage is the utilization of obtained funds to build the return on owners’ value...

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