The Impact of Financial Leverage on Corporate Performance
Jingchen Liu
Co-Presenters: Individual Presentation
College: College of Business and Public Management
Major: Accounting
Faculty Research Mentor: Huaibing Yu
Abstract:
This research explores the role of financial leverage in corporate performance, analyzing how companies utilize debt financing to enhance growth and profitability. Financial leverage, measured by ratios such as debt-to-equity (D/E) and interest coverage, plays a crucial role in determining a firm's risk and return trade-offs.The study examines both the advantages and risks of financial leverage, including how it amplifies earnings potential but also increases financial distress risk. By analyzing financial statements and case studies of leveraged firms, the research will assess the impact of leverage on profitability, liquidity, and shareholder value. Additionally, it will discuss how industry characteristics and market conditions influence optimal leverage levels.This topic is particularly relevant for finance and accounting students, as it integrates concepts of corporate finance, risk management, and financial statement analysis, providing insights into real-world financial decision-making.