What Is Leverage in Finance and What Is the Formula?

Leverage in finance truly has various definitions, primarily based on a single thought – employing borrowed dollars – ordinarily from fixed-revenue securities like financial debt and most well-liked equity or favored shares of stocks – to maximize a firm’s return on expense.

A hugely frequent company and finance approach, leverage can be applied by a business to leverage debt to create economical assets. Financial leverage is mainly defined as the leveraging of many personal debt devices to boost a business’s return on financial investment.