... operating and financing profitability and overall shareholder profitability 1.1 Distinguishing the Profitability of Operations from the Profitability of Financing Activities With a focus on common equity ... expected profitability of the book value, and leverage affects profitability So our empirical analysis investigates the effect of leverage on both profitability and price-to-book ratios Or, stated ... implications of the two types of leverage for profitability and equity value The paper has laid out explicit leveraging equations that show how shareholder profitability is related to financing leverage and...