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Financial Management by Sheeba Kapil

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12

Leverages

“When you combine ignorance and leverage, you get some pretty interesting results.”

 

Warren Buffet

LEARNING OBJECTIVES

After reading the chapter, you will be able to:

  1. Understand the concept and rationale of leverage.

  2. Discuss the different types of leverages and their importance in business.

  3. Understand the concept of operating leverage and the calculation of the degree of operating leverage and its contribution to business risk.

  4. Understand the concept of financial leverage and the calculation of the degree of operating leverage its contribution to financial risk.

  5. Understand the concept of EBIT–EPS analysis.

FINANCE IN PRACTICE

EMC Corporation is an electronic storage giant that delivers products, services and solutions ...

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