Financial Leverage

Financial leverage refers to the amount of liabilities or debt which a company has taken on for assets financing. As a matter of fact, any healthcare organization requires to expand its current operational level by expanding its facility and adding the needed resources. The facilities and resources expansion can be financed by use of debt or/and equity.  However, it is essential to gauge and analyze if the organization contains the aptitude to support and sustain the debt acquired for its growth and expansion. An organization needs to guarantee that the benefits for leverage taking offset the costs. An example of leverage in a healthcare organization is the money borrowed to finance healthcare expansion, or building new specialist unit for instance cardiovascular unit. The money must be repaid together with interest (Tracy, 2012).

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