what is trading on equity??
Why, and how it can used by a business organisation???
Answers
hey!
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Answer:-
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Trading on equity defines the increase in profit earned by the equity shareholders due to presence of fixed financial charges.
When a company is higher the rate of interest on borrowed funds. so company should option for trading on equity.
hope it will help u!!
Answer: Trading on Equity, also known as financial leverage, is the balance between the cost financing operations with equity or debt and the income earned from the operations. Trading on equity occurs when a company incurs new debt such as from bonds, loans, or preferred stock to acquire assets on which it can earn a return greater than the interest cost of the debt. ... It may allow business organization to earn a disproportionate amount on its assets. Favorable tax treatment...