Holmes Institute HC2091 Memo 03 – T03, 2015
Background:
Mr Chad Cheatem and Mr Hiram Howe have gotten
into a massive argument about the merits and risks of
financial and operating leverage.
Mr Cheatem argues that firms can be made more
profitable by maximising the operating leverage. Mr
Howe argues that operating leverage is too risky and
that it is safer for firms to enhance the earnings per
share by maximising their financial leverage.
Required:
Mr Dewey has asked you to research financial and
operating leverage on the internet and to provide a 1½
page review and evaluation of the merits and risks of
financial and operating leverage.
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Loopholes Located Books Juggled Taxes Evaded
Funds Diverted Money Laundered Shortages Hidden
Pensions Plundered Credit Denied Parking Validated
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