Although hargrove co. makes enough money to pay for everything it needs, it still chooses to have some debt and pay a larger portion of retained earnings back to the stockholders. what is likely the best explanation for this decision?

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14-12-2017
Business

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Although hargrove co. makes enough money to pay for everything it needs, it still chooses to have some debt and pay a larger portion of retained earnings back to the stockholders. what is likely the best explanation for this decision?

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ahmedishaal ahmedishaal · Answer 1 · 2017-12-22T23:35:32+01:00

ahmedishaal ahmedishaal

22-12-2017

The best explanation for this decision is "financial leverage".

Financial leverage refers to the amount of debt that is used by an entity to purchase more resources. Leverage is utilized to abstain from utilizing excessively value to support operations. An intemperate measure of money related use expands the danger of disappointment, since it turns out to be more hard to repay debt.

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