#reading-37-measures-of-leverage
Companies with high operating leverage have less flexibility in making changes, and bankruptcy protection does little to help reduce operating costs. Companies with high financial leverage use bankruptcy laws and protection to change their capital structure and, once the restructuring is complete, can emerge as ongoing concerns.
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Open it The difference between a company that reorganizes and emerges from bankruptcy and one that is liquidated is often the difference between operating and financial leverage. Companies with high operating leverage have less flexibility in making changes, and bankruptcy protection does little to help reduce operating costs. Companies with high financial leverage use bankruptcy laws and protection to change their capital structure and, once the restructuring is complete, can emerge as ongoing concerns. Summary
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