MANAGEMENT

Detailed explanation-1: -Financial leverage is the use of debt to buy more assets. Leverage is employed to increase the return on equity. However, an excessive amount of financial leverage increases the risk of failure, since it becomes more difficult to repay debt.

Detailed explanation-2: -The debt-to-equity ratio (D/E ratio) shows how much debt a company has compared to its assets. It is found by dividing a company’s total debt by total shareholder equity. A higher D/E ratio means the company may have a harder time covering its liabilities.

Detailed explanation-3: -Total-debt-to-total-assets is a leverage ratio that defines how much debt a company owns compared to its assets. Using this metric, analysts can compare one company’s leverage with that of other companies in the same industry.

Detailed explanation-4: -Debt-to-total assets ratio (debt-to-total capital ratio) The debt-to-total-assets ratio shows how much of a business is owned by creditors (people it has borrowed money from) compared with how much of the company’s assets are owned by shareholders.

Detailed explanation-5: -D/E ratio is an important metric in corporate finance. It is a measure of the degree to which a company is financing its operations with debt rather than its own resources. Debt-to-equity ratio is a particular type of gearing ratio.