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1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. 2. The amount of debt used to finance a firm's assets. A firm with significantly more debt than equity is considered to be highly leveraged. Leverage is most commonly used in real estate transactions through the use of mortgages to purchase a home.
Definition of 'Synergy'
The idea that the value and performance of two companies combined will be greater than the sum of the separate individual parts.
internal financing
Surplus funds generated through a firm's operations and available for capital investment. These funds are shown as retained-earnings and depreciation in the firm's financial statements.
Cash Breakeven Point = (fixed costs depreciation) / contribution margin per unit. Cash breakeven point definition and explanation: The cash breakeven point indicates the minimum amount of sales required to contribute to a positive cash flow. The cash breakeven point is included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.
internal financing
Definition
Surplus funds generated through a firm's operations and available for capital investment. These funds are shown as retained-earnings and depreciation in the firm's financial statements.
Definition
The cost associated with raising one additional dollar of capital. The marginal cost will vary according to the type of capital used. For example, raising funds through the use of unsecured or subordinated debt, or through debt that requires higher interest rates to offset risk, will be more expensive than debt that is backed by collateral, such as a secured bond.