Positive Financial Leverage Definition:

Positive financial leverage is a situation in which the fixed return to a company’s creditors and preferred stockholders is less than the return on total assets. In this situation, the return on common stockholders’ equity will be greater than the return on total assets.

Relevant Terms:

• Negative and Positive Operating Leverage
• Operating leverage
• Negative financial leverage

Other Related Accounting Articles:

• Negative Financial Leverage Definition
• Positive and Negative Operating Leverage Definition
• Operating Leverage Definition
• Financial Leverage Definition
• Negative Equity
• Tangible Common Equity
• Calculation of Stockholder Equity
• What is a Financial Leverage?
• Financial Accounting
• Different Types of Dividends