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Q » What is financial leverage and how does it impact a company's profitability?
01 Nov, 2025
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A » Financial leverage involves using borrowed capital to boost a company's investment potential, amplifying returns on equity when investments perform well. However, it also heightens risk, as interest obligations can erode profitability if earnings fall short. By strategically managing leverage, companies can enhance growth prospects, though excessive reliance may lead to financial distress. Balancing debt and equity is crucial for sustainable profitability and long-term success.
01 Nov, 2025
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