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Ch_014

Ch_014

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Published by Akash saxena

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Categories:Types, School Work
Published by: Akash saxena on Oct 19, 2010
Copyright:Attribution Non-commercial

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10/19/2010

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Chapter -14
Financial and OperatingLeverage
 
By Akash saxena
Chapter Objectives
E
xplain the concept of financial leverage.
Discuss the alternative measures of financialleverage.
Understand the risk and return implications of financial leverage.
 Analyse the combined effect of financial andoperating leverage.
Highlight the difference between operatingrisk and financial risk.
 
By Akash saxena
Capital Structure Defined
T
he term capital structure is used to representthe proportionate relationship between debtand equity.
T
he various means of financing represent thefinancial structure of an enterprise.
T
he left-hand side of the balance sheet (liabilities plusequity) represents the financial structure of acompany.
T
raditionally, short-term borrowingsare excluded from the list of methods of financing the firm¶s capital expenditure.

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