Impact of leverage in firm investment decision

DATA ANALYSIS AND INTERPRETATION What is Leverage can be defined as the ability of a firm to use its fixed cost assets or funds to magnify the returns to According to Besley and is created when a firm has fixed cost associated either with its sales and production operation or with its financing Leverage in other sense is the degree to which an investor or business is utilizing borrowed The higher the degree of the higher the degree of risk and rate of Companies that are highly leveraged may be at risk of bankruptcy if they are unable to make payments on their they may also be unable to find new lenders in the Leverage is not always it can increase the return on their investment and often there is tax advantages associated with The objective of Financial Management is to maximize the wealth of organization and to magnify the returns to Financing and investment decisions are very important in maximizing The fixed cost assets or funds of a company play important role in maximizing ROE Classifications of leverages are classified into two it can be ultimately three These Operating Leverage Financial Leverage Operating Leverage Operating leverage may be defined

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