Financial strategy: Planning and managing the corporate leverage position

Carl Sandberg; Wilbur G. Lewellen; Kenneth L. Stanley

doi:10.1002/smj.4250080103

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Financial strategy: Planning and managing the corporate leverage position

Carl Sandberg^1,2; Wilbur G. Lewellen²; Kenneth L. Stanley³

¹ American Institute of Biological Sciences · ² Purdue University West Lafayette · ³ Valdosta State University

Strategic Management Journal 1987

Among the important elements of a company's strategic plan is its decision about the degree of financial leverage it elects to imbed in its capital structure. A simple operational framework that can assist in framing that decision, which concentrates on the likelihood of being unable to meet fixed financial charges, is presented. The model is tested empirically, and support for its potential usefulness in the financial planning process is found.

DOI: 10.1002/smj.4250080103
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