#cfa #corporate-finance #reading-37-measures-of-leverage
The valuation of a company and its equity is affected by the degree of leverage: The greater a company’s leverage, the greater its risk and, hence, the greater the discount rate that should be applied in its valuation.
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Open it" data-bubo-id="temp-selection">the valuation of a company and its equity is affected by the degree of leverage: The greater a company’s leverage, the greater its risk and, hence, the greater the discount rate that should be applied in its valuation.<span> Further, highly leveraged (levered) companies have a greater chance of incurring significant losses during downturns, thus accelerating conditions that lead to financial distress and ba Summary
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