This essay focuses on loans from suppliers and the government. higher than the amounts that it must pay creditors and preferred stockholders? Henderson has been successful

loans from suppliers and the government

Has Henderson successfully employed favorable leverage? Money is all these, and none of them, for it is primarily a way of ordering our lives. But this in a particular, arbitrary way: an attempt to make the often indeterminate. It is  qualities of our experience fit neatly into quantities. The quantities that can be counted and compared to standard units.

That is, has it been able to earn an overall rate of return on assets that is higher. It is than the amounts that it must pay creditors and preferred stockholders?. Henderson has been successful in using outside money: neither of the sources must be paid a rate in excess of the 11.8% overall rate on assets used. Henderson has also been able to borrow some amounts on an interest-free basis. As mentioned earlier, the accounts payable and taxes payable represent interest-free loans from suppliers and the government, although the loans are typically for a short period of time, such as 30 days.

In summary, the excess of the 21.7% return on equity over the 11.8% return on assets indicates that Henderson’s management has been successful in employing leverage. Is it possible to be unsuccessful in this pursuit; that is, can there be unfavorable leverage? If the company must pay more for the amounts provided.

It is by creditors and preferred stockholders than it can earn overall, as indicated by the return on assets, there will, in fact, be unfavorable leverage. This may occur when interest requirements are high and net income is low. A company would likely have a high debt-to-equity ratio as well when there is unfavorable leverage.