Understanding Financial Leverage | MBTN Academy
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01 Apr Financial Leverage – April’s Free MBTN Tutorial

Posted at 17:49h in Finance, Leverage, Online Education by

This month’s free MBTN tutorial preview covers financial leverage, the second in the leverage series of finance modules. The tutorial is authored by Thomas Kinnear of the University of Michigan, based on his EMBA courses in strategy and entrepreneurship. Understanding the implications of financial leverage, both pro and con, is crucial for managers and investors, as it can significantly impact investment strategies and outcomes. This module covers the following topics:

This module introduces financial leverage, the indifference point, and combined leverage, as well as methods for calculating each and their managerial implications.

  • Introduction to the concept of financial leverage with examples
  • The indifference point or the level of EBIT where a company is capitalized has no impact on EPS
  • Calculation of the combined power of operational and financial leverage and understanding its strategic implications

At its core, financial leverage involves using borrowed funds to amplify the potential returns of an investment. In the financial realm, leverage allows investors to control larger positions in assets than what their own capital would allow. However, using leverage is not without its risks, so it is essential that managers fully understand the strategic implications of leverage.

The free link has expired, but check out this month’s tutorial under the Business Education Resources Blog.

If you find this topic valuable and you are faculty at a University or Community College, you might also be interested in our complete catalog of MBTN modules, available for use in academic settings. You can choose any combination of 3 or more modules to suit your needs.

Our complete catalog of MBTN modules

Brochure for Finance Modules when used in an academic setting

If you’re an individual interested in financial or other business topics, use consider following links to enhance your knowledge base.

Finance Bundle – includes all Finance Modules ($49.95)

We hope you enjoyed this month’s tutorial on financial leverage.

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Your Team at MBTN Academy

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Leverage 2: Financial Leverage

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