financial leverage

financial leverage
Fin
the use of debt finance to increase the return on equity by deploying borrowed funds in such a way that the return generated is greater than the cost of servicing the debt. If the reverse is true, and the return on deployed funds is less than the cost of servicing the debt, the effect of financial leverage is to reduce the return on equity.
Also known as gearing

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  • Financial leverage — Use of debt to increase the expected return on equity. Financial leverage is measured by the ratio of debt to debt plus equity. The New York Times Financial Glossary * * * financial leverage financial leverage ➔ leverage1 * * * financial leverage …   Financial and business terms

  • financial leverage — Use of debt to increase the expected return on equity. Financial leverage is measured by the ratio of debt to debt plus equity. Bloomberg Financial Dictionary * * * financial leverage financial leverage ➔ leverage1 * * * financial leverage UK US… …   Financial and business terms

  • Financial leverage clientele — A group of investors who have a preference for investing in firms that adhere to a particular financial leverage policy. The New York Times Financial Glossary …   Financial and business terms

  • financial leverage clientele — A group of investors who have a preference for investing in firms that adhere to a particular financial leverage policy. Bloomberg Financial Dictionary …   Financial and business terms

  • Financial leverage ratios — Related: capitalization ratios. The New York Times Financial Glossary …   Financial and business terms

  • financial leverage ratios — Common ratios are debt divided by equity a debt divided by the sum of debt plus equity. Related: capitalization ratios. Bloomberg Financial Dictionary …   Financial and business terms

  • financial leverage — relation between foreign capital and a business capital (Accounting) …   English contemporary dictionary

  • financial leverage — See: gearing …   Accounting dictionary

  • financial leverage — See gearing …   Big dictionary of business and management

  • Degree Of Financial Leverage - DFL — A leverage ratio summarizing the affect a particular amount of financial leverage has on a company s earnings per share (EPS). Financial leverage involves using fixed costs to finance the firm, and will include higher expenses before interest and …   Investment dictionary

  • Leverage (finance) — In finance, leverage (sometimes referred to as gearing in the United Kingdom) is a general term for any technique to multiply gains and losses.[1] Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives.[2]… …   Wikipedia

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