A profitable firm with a very low debt-equity ratio might be able to increase return on equity by taking on additional debt.

Name: A profitable firm with a very low debt-equity ratio might be able to increase return on equity by taking on additional debt.
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This is because leveraging (taking on debt) can amplify the returns on equity when the cost of debt is lower than the return on investment, allowing the firm to earn more on borrowed funds than it pays in interest.

A Profitable Firm with a Very Low Debt-Equity Ratio Might