The use of debt financing insures an increase in return on equity.

Name: The use of debt financing insures an increase in return on equity.
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Debt financing can increase return on equity if the firm earns more on the borrowed funds than it pays in interest. However, it also increases financial risk, and if the cost of debt exceeds the returns generated by its use, it can decrease return on equity.

The Use of Debt Financing Insures an Increase in Return