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Thinking About Financial Leverage
Finance Textbooks Boundless Finance Capital Structure Thinking About Financial Leverage
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Concept Version 7
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Defining Financial Leverage

Financial Leverage Firm Value Implications

Financial Leverage Firm Value Implications

This graph illustrates a theoretical firm value maximizing curve when it comes to a debt-to-equity ratio. All this means is that each organization has the ideal balance between debt and equity, and finding the 'sweet spot' is a useful strategic aspect of financial leverage decisions.

This graph illustrates a theoretical firm value maximizing curve when it comes to a debt-to-equity ratio. All this means is that each organization has the ideal balance between debt and equity, and finding the 'sweet spot' is a useful strategic aspect of financial leverage decisions.

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    "TradeOff.png."
    https://upload.wikimedia.org/wikipedia/commons/7/79/TradeOff.png Wikimedia CC BY-SA 3.0.

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