leverage

Definitions (2)

1. 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.
2. What the debt/equity ratio measures.

Use leverage in a sentence

The new investor provided extra leverage for the company in the midst of the important and rather messy buy out process.

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We decided to increase the leverage we were exercising for our company by taking out a loan to cover current liabilities.

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The store was highly leveraged and the pace of their existing sales seemed quite unlikely to help them pay back their debts in a timely manner to prevent bankruptcy.

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