Nevertheless, stakeholders must weigh the benefits against the risks to make informed decisions about the company’s financial strategy. If a company fails to generate sufficient returns, the burden of debt can lead to financial distress or even retained earnings balance sheet bankruptcy. Thus, while leveraging can enhance profitability in favorable

Companies can use various hedge instruments to cope with the risks of a volatile economy. Futures, forwards, options, trial balance and swaps are financial contracts that allow companies to fix the future prices of their products or the rates of their debts. With these instruments, companies can safeguard their profitability