A/E is Financial Leverage or Operating leverage?

CFA Level II
#1

A/E is Financial Leverage or Operating leverage?

#2

financial leverage

#3

LOL…wondered that myself…turns out is both, depending on what chapter your read, whether Pratt is telling you, Dupont, CFAI, or Schweser. Sometimes, just for fun, they call it an “equity multiplier”

#4

Remember, operating leverage relates to the amount of fixed costs you have whereas financial leverage relates to the amount of debt you have so that should answer your question hopefully.