Dictionary of Accounting Terms: financial leverage
financial leverage
portion of a firm's assets financed with debt instead of equity. It involves contractual interest and principal obligations. Financial leverage benefits common stockholders as long as the borrowed funds generate a return in excess of the cost of borrowing, although the increased risk can offset the general cost of capital. For this reason, financial leverage is popularly called trading on equity. Financial leverage is measured by the debt-equity ratio.
Dictionary of Real Estate Terms: financial leverage
financial leverage
the use of borrowed money to complete an investment purchase.
