Reading 37 Measures of Leverage (Layout)
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The reading is organized as follows:
Section 2 introduces leverage and defines important terms.
Section 3 illustrates and discusses measures of operating leverage and financial leverage, which combine to define a measure of total leverage that gauges the sensitivity of net income to a given percent change in units sold. This section also covers breakeven points in using leverage and corporate reorganization (a possible consequence of using leverage inappropriately).