Does financial leverage debt have any impact on the free, Ask an Expert

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Does financial leverage (debt) have any impact on the Free Cash Flow, on the Cash Flow to Shareholders, on the growth of the company and on the value of the shares?

Debt has no influence on Free Cash Flow because this is, by definition, the flow to shares if the company had no debt. Though, the equity flow does depend on the debt. This also affects the capitalization and the value of shares. If a company increases its debt, its capitalization decreases and, naturally, the price per share enhance.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M9578020

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