Question

Having in mind the pandemic, should a company reduce its leverage in order to add value to its shareholders? and why?

Answer 1

Answer:

No, taking into account the pandemic, companies should not reduce their leverage, as this would make it very difficult for small and medium investors to invest in a context of lack of income and shortage of available circulating money.

Therefore, leverage implies the possibility for investors to access the necessary funds to be able to invest their money, without the need to dispose of their savings or the money they use for essential activities.