Management Notes

Reference Notes for Management

Higher FL is related the use of:

Higher FL is related the use of:

A. Higher Equity
B. Higher Debt
C. Lower Debt
D. None of the above

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The Correct Answer for the given question is option B. Higher Debt


Answer Explanation for Question: Higher FL is related the use of:

A financial leverage refers to the presence of debt in the capital structure of a company. This can also be referred to as the fixed cost bearing source of funds used by a company as part of its capital structure. It could include debts, preference shares, etc. An organization’s degree of financial leverage increases with the amount of debt financing it uses.

Which one of the following statements concerning financial leverage is correct?


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