What is financial leverage? Explain the same with suitable examples extracted from retail business.

Financial leverage refers to the use of borrowed capital, such as loans or debt, to increase the potential return on investment. It allows a company to amplify its profitability by using borrowed money to fund operations, expand, or make investments, with the expectation that the return on the investment will be greater than the cost of the borrowed funds.

In the context of retail businesses, financial leverage can be illustrated with the following examples:

1. Store Expansion:

   • Scenario: A national retail chain wants to open new stores in different locations to reach a wider customer base.
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