# Leverage Formula

Finance / June 6, 2018 / Hanna Hunt

Usually, whether you can afford a loan depends on whether you can afford the periodic payment (commonly a monthly payment period). So, the most important amortization formula is probably the calculation of the payment amount per period.

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Changes in Working Capital is reported in the cash flow statement since it is one of the major ways in which net income can differ from operating cash flow. Under the accruals system, companies calculate revenue and expenditure when a transaction occurs instead of when the cash actually changes hands.

The total cost of choosing one action over another. The economic cost includes the accounting cost, or actual funds spent carrying out the action, and the opportunity cost, or the amount of money that could have been made by using funds and other resources dedicated to the action on some other objective.

In the real world, simple interest is rarely used. When you deposit money into an interest-bearing account, or take out a line of credit, the interest that accumulates is added to the principal, and the next interest calculation is done on both the principal and the interest.

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