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Why Is It Important for Businesses to Understand the Interest

question 15

Essay

Why is it important for businesses to understand the interest rate path? How do companies use debt to leverage their ?nancial returns? Illustrate with an example.


Definitions:

Balance Sheet

A fiscal report summarizing the possessions, debts, and equity of shareholders in a company on a certain date.

Revenue

Revenue generated by a corporation through its commercial operations, usually from offering products and services to its clientele.

Net Income

The company’s earnings remaining after total revenue has been adjusted for expenses, taxes, and other charges.

Liabilities

The financial obligations or debts a company owes to others.

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