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Operating Margin Explained

Operating margin (OM) is defined as the ratio of operating profits to sales revenue. It represents the profits that a...

Difference Between Net Income and Cash Flows

The income statement displays the financial result of a company's operations over the course of its financial year or a...

Financial Leverage: Example

Financial leverage (FL), with the right mix of debit-equity, may positively impact return on equity (ROE). Suppose, for example, two...

Financial Leverage and Risk

A firm's capital structure affects the riskiness inherent in the firms common stock and thus affects its required rate of...