Investment Analysis

Financial Leverage

Definition

What is Financial Leverage?

The use of debt or other fixed claims to amplify returns and losses to equity holders.

Example in practice

Borrowing raises ROE in good periods but increases bankruptcy risk.

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The evaluation of economic, industry, company, and financial information to estimate an investment's value.

The use of mathematical models, statistics, and structured data to evaluate investments.

The degree to which reported profit reflects sustainable operations and is supported by cash flow.

A trade or series of trades creating the appearance of activity without a genuine change in beneficial ownership.

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