Question

The concept of financial leverage has a direct relationship with ______.

• A. Capital structure management
• B. Cost of capital
• C. Dividend policy
• D. Capital bugeting

Answer 1

Answer: (A)

Capital structure management

Financial leverage is generally used by any company who have debt in their capital structure. The leverage means the performance of the business by employing debts into capital structure influences the return that a firm can deliver to it's owner. In this way, concept of financial leverage has a direct relationship with capital structure management.