LEVERAGE | Meaning & Types of Leverage | Finance | MBA | MCOM | BCOM | BBA | CA | CFA

This video explains all aspects of Leverage. It covers the meaning of leverage and the three types of leverage namely:
• Operating Leverage
• Financial Leverage
• Composite/Combined Leverage
The concept of leverage is explained by providing a basic understanding of types of cost due to which leverage takes place. Types of cost is classified into 2 categories – Variable Cost & Fixed Cost. Fixed cost is further classified into Operating fixed cost and Financial fixed cost.
The viewers can easily understand the concept of operating leverage and financial leverage through operating fixed cost and financial fixed cost respectively. Followed by the conceptual understanding of leverage, the video talks about the formulas used to calculate them.
Each term used in the formulas is illustrated well and the full calculation in the form of statement is presented. It will be easy for the viewers to memorize the flow of terms. Along with the flow of calculations required, the leverages are indicated against each term so that a broad overview can be presented.
It is critical to understand the difference between operating leverage and financial leverage. Thus, a comparative format is used to convey the difference in a meaningful manner.
The video concludes with a numerical question to be solved by the viewers by using the formulas explained in the video. The viewers can send the solution to us via email – simplifyconcepts@gmail.com.
If you find any topic related to finance difficult, you can write to us. We will make a video on demand.
This video is prepared by Dr.Shuchi who holds a doctoral degree in Finance. She is keen to provide customized solutions to the varied problems posted by our viewers.

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