Negative Financial Leverage Definition

By Sidra Farid March 25, 2014 #Financial Leverage, #leverage, #Negative Financial

Negative Financial Leverage Definition:

Negative financial leverage is a situation in which the fixed return to a company’s creditors and preferred stockholders is greater than the return on total assets. In this situation, the return on common stockholders’ equity will be less than the return on total assets.

Relevant Terms:

Negative and Positive Operating Leverage
Operating leverage
Positive financial leverage

By Sidra Farid

Sidra is a accounting teacher in a college and is expert in Managerial accounting . She is also the permanent writer at Accounting Details and is famous for her easy language and simple answers.