Features of analysis of the effect of financial leveridge

One of the main tasks of financial management of a corporation is the maximization of profitability of own capital in the existing economic conditions. Financial leverage allows managers to influence corporate profits by structuring liabilities, changing the ratio of debt and equity. The impact of changes in the structure of borrowed and equity capital on corporate profits, as well as "tax savings" due to the inclusion of interest in tax expenses, on the return on equity is described by the category financial leverage.