Question:
The proportion of debt in the overall capital is called Financial Leverage.
The proportion of debt in the overall capital is called Financial Leverage.
Show Hint
Financial Leverage = Use of debt in capital structure.
Updated On: Mar 16, 2026
Hide Solution
Verified By Collegedunia
Solution and Explanation
Financial leverage represents the use of fixed-cost sources of funds (like debt) in the company's capital structure.
Was this answer helpful?
0
0
Top Questions on Financial Management and Financial Market
- As a Human Resource Manager, list out any eight external sources of recruitment.
- KSEAB Class XII - 2026
- Business Studies
- Financial Management and Financial Market
- What is Staffing?
- KSEAB Class XII - 2026
- Business Studies
- Financial Management and Financial Market
- What is Directing?
- KSEAB Class XII - 2026
- Business Studies
- Financial Management and Financial Market
- GreenTech Solutions, a renewable energy company, focuses on achieving financial stability and growth through robust financial management. The company ensures efficient allocation of business finance to expand operations, adopt new technology, and maintain a competitive edge. Its financial planning is centered on long-term sustainability, balancing profitability with eco-friendly initiatives.
To optimize its capital structure, GreenTech maintains a balanced mix of debt and equity, minimizing the cost of capital while ensuring financial flexibility. The firm undertakes thorough capital budgeting processes to evaluate projects like setting up new solar farms, ensuring only viable investments are pursued. Tools like Net Present Value (NPV) and Internal Rate of Return (IRR) guide decision-making.
GreenTech’s dividend decision aligns with its growth strategy. While retaining a significant portion of earnings for reinvestment, the company ensures consistent dividends to satisfy shareholders. This approach strengthens investor confidence while funding expansion plans.
Efficient working capital management ensures smooth day-to-day operations. By optimizing cash flow, managing inventory, and negotiating favorable credit terms with suppliers, GreenTech avoids liquidity issues while meeting short-term obligations.
Through prudent financial strategies, GreenTech achieves its goal of profitability and sustainability, setting an example in the renewable energy sector.- CUET (UG) - 2025
- Business Studies
- Financial Management and Financial Market
- Explain the following factors affecting the working capital requirements of a company :
(a) Level of competition
(b) Inflation- CBSE CLASS XII - 2025
- Business Studies
- Financial Management and Financial Market
View More Questions
Questions Asked in KSEAB Class XII exam
- If $F$ is an event of a sample space $S$, then $P(S|F)=$
- KSEAB Class XII - 2026
- Probability
- If $m$ and $n$ are respectively the order and degree of the differential equation $2x^2\dfrac{d^2y}{dx^2}-3\dfrac{dy}{dx}+y=0$, then $m+n=$
- KSEAB Class XII - 2026
- Differential Calculus
- The point of inflection of the function $f(x)=x^3$ in the interval $[-1,1]$ is
- KSEAB Class XII - 2026
- Differential Calculus
- The value of $\hat{i}\cdot\hat{i}+\hat{j}\cdot\hat{j}$ is
- The probability of obtaining an even prime number on each die when a pair of dice is rolled is
- KSEAB Class XII - 2026
- Probability
View More Questions