More details🧐 Raya intends to use the proceeds from the sale to reduce the company’s debts owed to a group of banks & thus improving its financial leverage (debt-to-equity ratio).
What is financial leverage🤷♀️ Companies finance their business activities by issuing debt (bonds) and/or equity (stocks). Together they make up a company’s capital structure, a critical area that companies’ managements aim to optimize. The higher a company’s debt compared to its equity, the higher its financial leverage & risk.
Why is this important🤔 While optimal capital structures vary based on companies’ strategy & several other factors, it is usually a good sign when companies repay their debt.
