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

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The use of debt to finance a firm's assets is known as financial leverage. The more debt a firm uses in relation to its total assets, the greater the financial leverage it uses. This increases the firm's risk, as the interest payments on debt must be made regardless of the firm's profitability. However, it also has the potential to increase the return on equity, as the firm is able to earn a higher return on its assets due to the lower cost of debt financing.

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