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Financial Management

Question
CBSEENBS12004232
Wired Faculty App

What do you mean by Financial Leverage?

Solution

The inclusion of the fixed cost capital (debt capital and preference share capital) along with equity share capital in the capital structure is called financial leverage. With the increase of financial leverage the ratio of cheap capital in the total capital of the company increases. Consequently, the total capital cost decreases and the company is in a profitable situation.

Some More Questions From Financial Management Chapter

How the wealth of shareholders can be computed?

What is meant by Financial Management?

Every manager has to take three major decisions while performing the finance function. Explain them.

Explain any six factors affecting the financing decision of a company.

Explain any six factors affecting the dividend decision of a company.

What is meant by Dividend decision? State any four factors affecting the Dividend decision.

What is meant by Financing decision? State any four factors affecting the financing decision.

 

Explain briefly the factors affecting the investment decision.

Explain, in brief, any five factors that should be taken into consideration while determining the long-term dividend policy.

Or

Explain factors affecting the dividend policy of a company.

“Determining the relative proportion of various types of funds depends upon various factors”. Explain any five such factors.

Or

“Determining the overall cost of capital and the financial risk of the enterprise depends upon various factors”. Explain any five such factors.

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