Explain the Concept of Financial Leverage

question 152

Essay

Explain the concept of financial leverage..a)Issuing the note will increase assets and liabilities.b)The first payment on the note will reduce liabilities and assets but will not affect stockholders' equity.c)The second payment on the note will include higher interest expense than did the first payment.d)Each payment on the note includes a cash flow from operating activities and a cash flow from financing activities.e)The amount of the principal repayment will increase with each succeeding payment.

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Definitions:

Processes

A series of actions or steps taken to achieve a particular end.

Disclose

The action of making information known or public, especially after being secret or private.

Family of Origin

relates to the family unit in which one was born or brought up, often influencing one's behavior and attitudes.

Overlook Differences

To ignore or disregard variations or disparities among individuals or situations, often to maintain harmony or focus on similarities.