#Binance Purpose and Benefits of Financial Leverage
When we talk about debt, we will definitely imagine the inherent risks. The greater the debt, the greater the risk faced by the crypto company/trader. Likewise with financial leverage, the higher the financial leverage, the higher the risk of default, this is because the company has difficulty paying debts.
Therefore, financial leverage is an important thing that can be used to determine the condition of a company, especially in terms of debt and company capital. Considering that shareholders have high hopes for the company which is related to the high rate of return (share returns) as a result of the risks the company faces. The following are the objectives of using financial leverage according to Kasmir (2014:153).
Knowing the company's position regarding debts to other parties.
Assess the company's ability to meet fixed debts.
Assess the balance between asset values, especially fixed assets, and capital.
Assess how much of the company's assets are financed by debt.
Assess how much influence the company's debt has on asset management.
Financial leverage is a tool that company management uses to make sound funding and investment decisions. The benefits of using financial leverage according to Kasmir (2014:154).
Analyze the company's position regarding debt to other parties.
Analyzing the company's ability to meet fixed debts.
Analyze the balance between asset values, especially fixed assets, and capital.
Analyze the amount of company assets financed by debt.
Analyze how much company debt affects asset management.
