Leverage Concept with Practical Example | Explained in Hindi

Описание: Using concept of leverage how to determine: Who is Better Full Time Employees or Freelancers ?

Leverage Concept with Practical Example
leverage is a strategy that companies use to increase assets, cash flows, and returns, though it can also magnify losses. There are two main types of leverage: financial and operating. To increase financial leverage, a firm may borrow capital through issuing fixed-income securities or by borrowing money directly from a lender. Operating leverage can also be used to magnify cash flows and returns, and can be attained through increasing revenues or profit margins. Both methods are accompanied by risk, such as insolvency, but can be very beneficial to a business.

Types of Leverage
Operating Leverage
Financial Leverage

Operating Leverage
Fixed operating expenses, combined with higher revenues or profit, give a company operating leverage, which magnifies the upside or downside of its operating profit.

Financial Leverage
When a company uses debt financing, its financial leverage increases. More capital is available to boost returns, at the cost of interest payments, which affect net earnings.



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