In general,the more debt a firm uses in relation to its total assets

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The more debt a firm uses in relation to its total assets, the greater the financial leverage it uses. Financial leverage refers to the use of debt to finance assets. When a firm uses debt to finance its assets, it can magnify the returns for equity holders during profitable periods, but it also increases the risk to equity holders during unprofitable periods. Therefore, higher financial leverage can increase the potential return for equity holders but also increases their risk.

In General,the More Debt a Firm Uses in Relation to Its