Dźwignia finansowa i jej składowe: nowa koncepcja metodologiczna
Financial leverage and its components: pure leverage and cost leverage

Summary/Abstract: The paper analyses the impact of financial structure on return on equity with special emphasis on the multiplier form of leveraged ROE function. Financial leverage multiplier is defined and subsequently used to define the financial leverage coefficient, which is shown to be a special case of the former calculated for the expected value of ROE. The impact of debt on return on equity stems from two independent sources: pure leverage and cost leverage. The paper identifies ways to measure the size of both effects. The impact of financial structure on risk measured by standard deviation of the returns is also analyzed. It is claimed that understanding of the impact of financial leverage on both: expected values of returns as well as their standard deviation may help capture more adequately the nature of financial leverage.

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