Define financial leverage. Explain how financial leverage works to the benefit of the common shareholders.

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David · Accepted Answer

Financial leverage is the amount of debt that an 
equity uses to buy more assets. An excessive amount 
of leverage possess a risk of failure , since it becomes 
more difficult to repay debt . 
 
Shareholders uses financial leverage in order to know 
the position of the company and also the financial 
stability of the same .

Define financial leverage. Explain how financial leverage works to the benefit of the common shareholders.

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