Question
Financial leverage
Answer :
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Financial leverage refers to the use of borrowed funds or debt to finance the operations and investments of a business, with the aim of increasing the potential return on equity. In the context of tourism management, financial leverage allows tourism enterprises, such as hotels, travel agencies, and tour operators, to expand operations, invest in infrastructure, or launch new services without relying solely on internal funds. The degree of financial leverage is measured by the proportion of debt in the company’s capital structure, which impacts both risk and profitability. A higher financial leverage can magnify profits
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