Discuss financial leverage and why it differs between industries. Discuss the three primary factors that are considered in determining the optimal proportion of debt versus equity for an industry, and compare these factors to both the pulp and newsprint industry and the diaper industry. Discuss what optimal capital structure means, the trade-offs between the benefits and risks of adding debt, and how increasing or decreasing debt affects the cost of equity

Answer rating: 100% (QA)

Financial leverage refers to the use of debt to finance operations or investments with the aim of magnifying returns to equity holders It is an essential concept in corporate finance as it allows comp... View the full answer