financial leverage

financial leverage definition - finance
The ability of a company to earn more on its assets by taking on debt that allows it to buy or invest more in order to grow its business. If a company can borrow funds at 8 percent and receive a 10 percent return, then it has financial leverage. If the market turns down, a heavily leveraged company can be in danger.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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