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When is financial leverage considered favorable?

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When is financial leverage considered favorable?
posted Jun 21, 2017 by Adarsh

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1 Answer

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First , Debt is considered a more effective source of positive financial leverage than preferred stock because the interest on debt is tax deductible but dividend on preferred stock is not.
Second, Financial Leverage is desirable when rate or return on investment using these amounts of money have been obtained from bank loan is more than the bank interests or dividends parables.

answer Jun 22, 2017 by Ritika Sharma