In general, the more debt a firm uses, the smaller its financial leverage.

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The more debt a firm uses, the larger its financial leverage. Financial leverage refers to the use of debt to finance a company's operations and investments. When a company has a high degree of financial leverage, it means that it has a significant amount of debt relative to its equity. This increases the potential gains for shareholders when the company is profitable, but also increases their potential losses when the company is not doing well.

In General, the More Debt a Firm Uses, the Smaller