#reading-37-measures-of-leverage
Highly leveraged (levered) companies have a greater chance of incurring significant losses during downturns, thus accelerating conditions that lead to financial distress and bankruptcy.
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Open it 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. Further, <span>highly leveraged (levered) companies have a greater chance of incurring significant losses during downturns, thus accelerating conditions that lead to financial distress and bankruptcy. <span> Summary
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