1. Operating and Financial Leverage
... borrowing base in a desire to increase returns. But what are the parameters of operating and financial leverage and why should managers fully understand the pros and cons of these accounting and finance tools? Operating Leverage: Operating leverage can be examined and defined from the context of accounting and finance. Two similar but different definitions of operating leverage are understood ... and then use that money to buy or invest in assets on which it will earn a return that is greater than the cost of the interest of the borrowed money. Thus, the owners will have a greater ROE t...
- Word Count: 762
- Approx Pages: 3
- Has Bibliography
- Grade Level: Undergraduate