The modern competitive business strategies cause subsequent
increase in the ability of firm that depends on efficient use of leverage in
the capital structure. Leverage can be defined as long term debt financing that
improves the permanent financial performance as well as the success of the
organization. It explains the use of borrowed funds for the investment andreturn on that investment. For this reason the determination of the proportion
of debt and equity is considered as one of the most essential decisions that
decide the future of the organization.
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