When a company borrows money in addition to shares,it creates leverage.

Leverage

The use of borrowed capital or financial instruments to increase the potential return of an investment.

Borrows Money

The act of receiving funds from another party under the agreement to return the principal amount along with interest or other charges.

A form of financial ownership in a company, giving the holder a portion of the profits and voting rights.

Understand the concept of financial leverage and its effects on a company's financial flexibility and shareholder return.

Verified Answer

manmeet kaur dhillonMay 19, 2024

Final Answer :

True

Explanation :

Leverage refers to the use of debt (borrowed funds) in addition to equity (shares) to finance a company's operations or projects, aiming to increase potential returns to shareholders.

Learning Objectives

Understand the concept of financial leverage and its effects on a company's financial flexibility and shareholder return.

When a company borrows money in addition to shares,it creates leverage.

Definitions

Learning Objectives

Learning Objectives

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