Leverage is a term that is used to define the level of debt financing. A project that is equally financed with debt and equity is an aid to be a balanced leveraged project. A project that is majorly financed through debt is called a highly leveraged project.
The capital structures of companies are usually a combination of equity and debt finance. The companies that are having a high leverage are considered to be risky. However, the overall cost of capital depends on the cost of debt and cost of equity. As the level of debt increase, leverage increase and shareholders required higher returns to compensate the risk of default, which in turn increase the overall cost of equity and ultimately cost of capital of the whole company.
Pittman Company is a small but growing manufacturer of telecommunications equipment.
Magic Realm, Inc., has developed a new fantasy board game
Angie Silva has recently opened The Sandal Shop in Brisbane, Australia
KMS corporation has assets of $500 million, $50 million
One alleged advantage of leasing voiced in the past was that it
A firm is about to double its assets to serve it’s rapidly
The questions in this exercise are based on the Benetton Group,
Bank A has a leverage ratio of 10, while Bank B
Alpha Corporation and Beta Corporation are identical in every way except
What factors would cause a difference in the use of financial leverage
