Foundations of Business (MindTap Course List)
Foundations of Business (MindTap Course List)
6th Edition
ISBN: 9781337386920
Author: William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher: Cengage Learning
Question
Chapter 16, Problem 5DQ
Summary Introduction

To determine: The ways small business owner or corporate manager use financial leverage to improve the firm’s profits and return on owners’ equity and whether there is any potential danger of using financial leverage.

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

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How can a small business owner or corporate manager use financial leverage to improve the firms profits in return on owners equity
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