...David Yecham Aharon; Yoram Kroll; Sivan Riff Purpose This paper aims to forgo the conventional (degree of operating leverage) risk measure by replacing elasticity of operating profits with respect to output with elasticity of free cash flow (FCF) with respect to optimal output and by considering...

... value that result from financial restructuring process and lead to the optimal leverage ratio. Design/methodology/approach The paper maintains that certain benchmarks – i.e. industry average financial leverage and unlevered beta corrected for cash – make it possible to determine the parameters...