leverage risk

Why Do Businesses Use Leverage?

Businesses use leverage for several reasons:
Growth: Leverage allows companies to access more capital than they could through equity alone, enabling them to invest in new projects, expand operations, and grow more rapidly.
Tax Benefits: Interest payments on debt are often tax-deductible, which can reduce the overall tax burden for the company.
Increased Returns: By using debt, companies can potentially achieve higher returns on equity, as long as the return on investments financed with debt exceeds the cost of the debt.

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