While too little a financial leverage figure represents overly conservative management,too high a figure represents high risk.

Question

Quizplus · Accepted Answer

This is because high financial leverage means that the company is relying heavily on debt to finance its operations, which can lead to financial instability and high interest payments. On the other hand, too little financial leverage may mean that the company is missing out on growth opportunities and is not taking advantage of the benefits of borrowing money. Therefore, an optimal level of financial leverage is necessary for companies to balance risk and return.

While Too Little a Financial Leverage Figure Represents Overly Conservative