Debt and leverage: Strategic ally or business enemy?

Abstract

Debt and corporate leverage have a direct impact on the capital structure and therefore on its profitability, which is the basis that the objective of this research lies in an exhaustive analysis of the different nuances implicit in the use of debt and leverage in organizations, for which a qualitative approach was applied with a descriptive scope based on a bibliographic type modality since the information obtained is of a documentary type and is related to the variables of debt and leverage that is complemented by the practical exemplification of conceptualizations collected from academic sources, scientific articles, books, official websites, business newsletters, and reports. With this it is concluded that a financial analysis based on timely tools such as financial ratios and the consideration of various exogenous and endogenous factors related to open companies found the probability of reaching an optimal capital structure from the business point of view. Similarly, the inadequate management of the tools designed for decision-making can become a barrier that prevents the growth of organizations.
Keywords: capital structure; leverage; indebtedness; cost effectiveness; risk.