What is the formula for calculating the financial leverage
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The formula for calculating financial leverage is as follows:
Leverage = total company debt/shareholder's equity.
Take these steps in calculating financial leverage:
Calculate the entire debt incurred by a business, including short- and long-term deb
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- The term leverage in literally sense means something used to take advantage of.
- In the context of financial management, financial leverage refers to a financial ratio which indicates proportion of debt in the total capital of an enterprise.
Financial Leverage = Debt/ Equity
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