Week 10 - Discussion 1 & 2

Week 10 - Discussion 1 & 2

Discussion 1

Ans1-The first discussion is related with the impact of debt financing on Accounting Risk and Return. The debt financing is an important tool for the financing of the business operations. The ratios that matters to create a debt policy that offers a financial leverage are:

Debt/Equity Ratio

Interest Gearing Ratio

The Debt/Equity Ratio is the main tool to assess the financing requirements of the company. The discount rate is going to matter because it will provide a scope to earn leverage on their investments. The interest gearing ratio also helps to ...