Business Definition for: positive leverage
positive leverage
positive leverage
the use of borrowed funds that increases the return on an investment.
Example:
See also
leverage
Related Terms:
situation, the opposite of financial leverage, where the interest on money borrowed exceeds the return on investment of the borrowed funds.
term commonly used in finance and accounting to describe the ability of fixed costs to magnify returns to a firm's owners. operating leverage, a measure of operating risk, refers to the fixed operating costs found in the firm's income statement. financial leverage, a measure of financial risk, refers to financing a portion of the firm's assets, bearing fixed financing charges in hopes of increasing the return to its owners. Total leverage is a measure of total risk. The way to measure total leverage is to determine how Earnings Per Share (EPS) is affected by a change in sales.
term commonly used in finance and accounting to describe the ability of fixed costs to magnify returns to a firm's owners. operating leverage, a measure of operating risk, refers to the fixed operating costs found in the firm's income statement. financial leverage, a measure of financial risk, refers to financing a portion of the firm's assets, bearing fixed financing charges in hopes of increasing the return to its owners. Total leverage is a measure of total risk. The way to measure total leverage is to determine how Earnings Per Share (EPS) is affected by a change in sales.
Referring Terms:
Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2004, 2000, 1997, 1993, 1987, 1984 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
