Using debt in order to control more assets. Also known as financial leverage.
Using debt in order to control more assets. Also known as financial leverage.
What is leverage? Definition of Leverage In accounting and finance, leverage is the use of a significant amount of debt to purchase an asset, operate a company, acquire another company, etc. Since the cost of debt is...
What is financial leverage? Definition of Financial Leverage Financial leverage which is also known as leverage or trading on equity, refers to the use of debt to acquire additional assets. The use of financial leverage...
Using debt (such as loans and bonds) to acquire more assets than would be possible by using only owners’ funds. Also referred to as trading on equity.
Financial Statements Video Training Part 8 Balance sheet: working capital, current ratio, financial leverage, notes to financial statements, comparative balance sheets Must-Watch Video Learn How to Advance Your...
The ratio of total liabilities to stockholders’ equity. The higher the proportion of debt to equity, the more risky the company appears to be. An indicator of the amount of financial leverage at a company. It...
What is the debt to total assets ratio? Definition of Debt to Total Assets Ratio The debt to total assets ratio is an indicator of a company’s financial leverage. It tells you the percentage of a company’s total...
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
What is trading on equity? Definition of Trading on Equity Trading on equity, which is also referred to as financial leverage, occurs when a corporation uses bonds, other debt, and preferred stock to increase its...
(as reported on the balance sheet) that is owed to creditors. The larger the debt ratio the greater is the company’s financial leverage. The appropriate debt ratio depends on the industry and factors that are unique...
the net revenues (or net sales) of a year by the average total assets of the same year. Mark as wrong Mark as right debt to equity ratio This ratio, which indicates financial leverage, is the amount of total liabilities...
to as financial leverage. Using debt financing allows the existing stockholders to maintain their percentage of ownership, since no new stock is being issued. However, the additional debt adds risk and may result in...
%)]. Since bonds are a form of debt, the existing stockholders’ ownership interest in the corporation will not be diluted. Therefore, the future gains from use of the bond proceeds (minus the bond interest payments)...
Our Explanation of Bonds Payable covers the recording of bonds, the accrual of interest expense, and the amortization of the discount and premium on bonds payable. You gain an understanding on why the market value of...
Our Explanation of Financial Ratios includes calculations and descriptions of 15 financial ratios. As you calculate the financial ratios you will also gain a deeper understanding of a company's operations and financial...
is perhaps $2,000,000.) 24. Which of the following is usually compared to a corporation’s total assets or to its total stockholders’ equity in order to determine the degree of financial leverage? Select... Cash and...
as the fair market value of the corporation. Select... True False 23. The __________ ratio is the amount of the current assets divided by the amount of the current liabilities. 24. A corporation’s financial leverage...
with bonds instead of stock? Select... Income tax savings Less risk 22. In the debt to equity ratio, debt refers to __________ liabilities. Select... current long-term total 23. A higher degree of leverage will mean a...
assets stockholders' equity 11. Which ratio best indicates a corporation’s financial leverage? Select... Current Debt to total assets Total asset turnover 12. A corporation that issues 7% bonds in order to invest...
was Jake Corporation’s debt to equity ratio as of December 31? Select... 0.36 0.64 1.56 2.75 View Coaching The debt to equity ratio indicates the corporation's use of financial leverage. Debt is the total amount...
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