Answer:
Financial leverage ratios are financial measurements that assess a company's ability to meet its financial obligations by looking at how much capital comes in the form of debt
These ratios are used to measure the amount of reliance a company has on creditors to fund its operations and asset purchases
The financial leverage ratio is one of the most commonly used leverage ratios in the financial industry
It tells us the proportion of a company's assets being financed through liabilities instead of equity and calculates the risk of a company
The higher the financial leverage, the more obligations it has to pay back, and hence, the risk of the company not meeting its obligation is also higher
The purpose of using a financial calculator for financial leverage ratios is to quickly estimate the financial leverage ratio
The calculator tells us how much of the company's assets are financed using debt instead of equity, which indicates the amount of leverage risk contained within an entity
The financial leverage ratio can be calculated by dividing the total debt by the shareholders' equity
Other common leverage ratios include the debt-equity ratio, equity multiplier, degree of financial leverage, and consumer leverage ratio
These ratios are used to measure a company's mix of operating expenses to get an idea of how changes in output will affect operating income.
In summary, financial leverage ratios are used to assess a company's ability to meet its financial obligations by looking at how much capital comes in the form of debt. The financial leverage ratio is one of the most commonly used leverage ratios in the financial industry, and it tells us the proportion of a company's assets being financed through liabilities instead of equity. The purpose of using a financial calculator for financial leverage ratios is to quickly estimate the financial leverage ratio, which indicates the amount of leverage risk contained within an entity.