In the context of small businesses, what is financial leverage?

Question

Quizplus · Accepted Answer

Financial leverage in the context of small businesses refers to using fixed-charge financing, such as loans or bonds, to fund operations. This allows the business to have more assets and thus potentially generate more revenue, but also increases the risk by adding debt obligations. Option A refers to profit sharing, option B refers to a type of security, and option C refers to providing credit to customers.

In the Context of Small Businesses, What Is Financial Leverage