What is Leverage?
A definition of Leverage
“Leverage refers to the use of borrowed funds to increase the potential return on investment. It can magnify both gains and losses, making it a powerful but risky financial tool.”
Business Glossary > What is Leverage?
Examples of Leverage in a Sentence:
The company used leverage to expand its operations rapidly.
Investors often rely on leverage to boost their portfolios’ returns.
Understanding leverage is crucial for making informed financial decisions.
Why is Leverage Important in Business?
Understanding leverage is crucial for making informed financial decisions. By using leverage, businesses and investors can increase their returns, but they must also be aware of the associated risks that could amplify losses.
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Associated Terms
Here are some associated business terms and synonyms for “Leverage”:
- Gearing
- Debt Financing
- Margin
Apple Inc. and Leverage
Apple Inc. uses leverage to finance its product development and international expansion. By strategically managing its debt, Apple can innovate and grow while maintaining financial stability and maximizing shareholder value.
Final Notes on Leverage
When businesses consider utilizing leverage, they should assess:
- The cost of borrowing
- The potential for return on investment
- The associated risks
Careful analysis of these factors is essential to leverage successfully.
This has been a definition of Leverage meaning.
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