BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -When a company uses debt fund in its financial structure, it will lead to a change in Financial leverage. Financial leverage is the amount of debt that an entity uses to buy more assets. Leverage is employed to avoid using too much equity to fund operations.

Detailed explanation-2: -Debt financing occurs when a company raises money by selling debt instruments to investors. Debt financing is the opposite of equity financing, which entails issuing stock to raise money. Debt financing occurs when a firm sells fixed income products, such as bonds, bills, or notes.

Detailed explanation-3: -Financial leverage is a measure of how much firm uses equity and debt to finance its assets. As debt increases, financial leverage increases. It has been seen in different studies that financial leverage has the relationship with financial performance.

Detailed explanation-4: -Borrowing funds in order to expand or invest is referred to as “leverage” because the goal is to use the loan to generate more value than would otherwise be possible. While less common, leverage can also refer to the use of something to achieve more than you would have been able to without it.

Detailed explanation-5: -For most companies, financial capital is raised by issuing debt securities and by selling common stock. The amount of debt and equity that makes up a company’s capital structure has many risk and return implications.