Leveraging
Stepping up on the capital front displays credibility to other parties. This concept describes the principles of leveraging and discusses its risks and advantages.
Technique Overview
Leveraging Definition
Leverage (also known as financial leveraging, or 'gearing') is the amount of outside funds (debt) the owners use in proportion to their own contributions to the financing of the firm. These funds widen the potential swing of both gains and losses to the equity (Guerard and Schwartz, 2007). Leverage increases the potential volatility of a company's profit; the greater the leverage, the greater the risk, and the greater the discount rate applied in its valuation (Clayman et al., 2008).
Leveraging Description *
* The full technique overview will be available soon. Contact us to register your interest in our business management platform, and learn all about Leveraging.
Business Evidence
Strengths, weaknesses and examples of Leveraging *
* The business evidence section is for premium members only. Please contact us about accessing the Business Evidence.
Business Application
Implementation, success factors and measures of Leveraging *
* The business application section is for premium members only. Please contact us about accessing the Business application.
Professional Tools
Leveraging videos and downloads *
* The professional tools section is for premium members only. Please contact us about accessing the professional tools.
Further Reading
Leveraging web and print resources *
Leveraging references (4 of up to 20) *
- Antczak, S.J., Lucas, D.J., Fabozzi, and F.J. (2009) Leveraged finance: Concepts, methods, and trading of high-yield bonds, loans, and derivatives, John Wiley and Sons.
- Canada, H. (2011) The morning leverage: SKBHC banking on need for stable financial partners. WSJ.com, Available at: (blogs.wsj.com/privateequity/2011/09/12/the-morning-leverage-skbhc-banking-on-need-for-stable-financial-partners/) [Accessed on 3 January 2012].
- Clayman, M.R., Fridson, M.S., and Troughton, G.H. (2008) Corporate finance: A practical approach, John Wiley & Sons.
- Fabozzi, F.J. and Drake, P.P. (2009) Finance: Capital markets, financial management, and investment management, John Wiley and Sons.
* The further reading section is for premium members only. Please contact us about accessing the further reading.
Learn more about KnowledgeBrief Manage and how you can equip yourself with the knowledge to succeed on Leveraging and hundreds of other essential business management techniques