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Financial management

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bharat mali

bharat mali (Querist)
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14 March 2012 what is leverage?

Ajay Mishra

Ajay Mishra (Expert)
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14 March 2012 Hi

Meaning of Leverage:

The degree to which an investor or business is utilizing borrowed money. Companies that are highly leveraged may be at risk of bankruptcy if they are unable to make payments on their debt; they may also be unable to find new lenders in the future. Leverage is not always bad, however; it can increase the shareholders' return on investment and often there are tax advantages associated with borrowing. also called financial leverage.

It is frequently used in finance to mean that a small amount of money (like a house downpayment) can be used to much greater financial effect, such as buying a house.

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